Edward Jones Profit Jumped 18% in 2020, Broker Count Fell in Q4
(Story updated on Jan. 14 with comment from firm about its pandemic hiring practices.)
Edward Jones, the biggest brokerage firm as measured by its more than 19,000 advisors, said Wednesday that its revenue in 2020 grew 7% and its profits 18%, despite the pandemic.
But business boomed in 2020, fueled by rising equity markets, lower costs and a massive shift of client assets to fee rather than commission accounts, firm parent Jones Financial Cos. said in a regulatory filing.
“Despite significant uncertainty throughout the year, the Partnership experienced both revenue and profitability growth in 2020,” it said in the Securities and Exchange Commission filing.
Jones lost a net 117 advisors in the fourth quarter, based on its end-of-third-quarter report, but managed to increase its brokerage force for the full year by 521. It ended 2020 with 19,225 advisors serving more than 7 million investors, according to Wednesday’s filing.
Net revenue for 2020 jumped 7% from 2019 to $10.1 billion, and net income set to be distributed to Jones Financial’s fewer than 500 partners rose by $193 million to $1.29 billion.
Just over 81% of its annual revenue came from fees that jumped 10% to $8.18 billion, primarily due to higher market levels and a concerted effort to move clients away from commission accounts. Commissions jumped 9%, to $1.72 billion, as customers shifted to higher-margin funds and equities, according to the filing.
Brokers also attracted $66.1 billion of net new assets to the firm last year, up 4% from $63.7 billion in pre-pandemic 2019.
Jones, which operates primarily from two-person offices, ended 2020 with $1.55 trillion of client assets “under care,” up 15% from $1.35 trillion 12 months earlier.
The firm, which relies heavily on second-career advisors, curtailed its training program amid the pandemic as part of its wide-ranging cutbacks and halted hiring of branch office administrators, the employees who complement advisors in Jones’s two-person offices.
“Between March and September 2020…the firm paused recruitment of non-licensed financial advisors during the pandemic to focus on strategies to ensure all our financial advisors could continue to help clients achieve financially what is most important to them during unprecedented market volatility,” a Jones spokesman said.
“We are focused on the intentional hiring of experienced financial advisors and non-licensed candidates while continuing to prioritize tailored and differential support and resources that our existing and new financial advisors need to be successful. We are investing in virtual business enablement tools that will make it possible for our branch teams to grow their practices and serve current and future clients with impact.”
In August, Jones restored its merit pay and promotion programs to the branch administrators and other salaried employees.
For all the disparagement directed at Edward Jones by some in the industry, the company deserves kudos for being the only firm bringing new blood into the financial advisory arena. I would add that it also should be credited for being willing to provide services to the huge (and arguably underserved) mass middle-market. That said, attrition within their experienced advisor ranks continues unabated, because a handful of firms treat EJ like a minor-league farm system and recruits people out of there as soon as they have built a decent book of business. In truth, there are significantly better opportunities for experienced advisors who fit that description, but EJ seems to get it’s people to drink the company Kool-Aid better than most others.
Ron Edde is correct – as someone who worked there I can attest that the FA population is not pleased from the top-down choices of the managing partner to the rhetoric of the leadership. They fill face continuous headwinds with attrition.
Are you saying that the Green Army isn’t embracing co-creation to provide the greatest human-centered Client Experience?
Wow. Didn’t realize the ivory towers at St. Louis were so top heavy with overpaid management!!
Right there in black & white…the ground troops in the field work their tails off just to stuff the GP returns.
Veteran FAs at EJ beware. Conform, keep your mouth shut and stay in line or a hard working level 9 or 10 FA’s office will prove to be a great start for 2-3 D&I newbies who have absolutely no idea what is going on.
This is not your momma (or daddy’s) Eddy Jones.
It’s all about the GPS.
Jones proves that serving smaller clients is not a money losing proposition!
It is true the veteran force is not happy with the messaging and direction of management and Penny. Aside from the kool aid guzzlers, the smart and open minded successful FAs are scratching their heads…..not that it means they want to leave…they want them to listen to us to make it a better experience for our clients and our business.