Pros: Local offices
Limited reliance on generic 800-numbers
Cons: Tight constraints on limited product offerings
High Advisor turnover
No Fiduciary Protections
In 2004, the Carey review was spot on! Indeed, this remained true through the first part of the so-called "Great Recession". One of the reasons Edward D Jones & Co was so strong was it had a great competitor in AG Edwards. In business, having a solid competitor of similar size, scope and philosophy makes both businesses stronger and helps mitigate foolish errors by leadership.
Sadly, once AG Edwards was absorbed by then-named Wachovia, Edward Jones lost a valuable waypoint in business. Managing Partner Jim Weddle continued his efforts to enact various "5-year plans" that included both excellent changes (improved systems, upgraded services) and unchecked errors (misrepresentation of business costs and liabilities to partners and associates, encouraging nepotism).
The fact that the Financial Services Industry is changing so quickly cannot be understated with regard to mid- to large-sized firms. Edward Jones spends considerable resources and time on "grass roots" efforts -- that is, lobbyists to Washington. This is a modern business reality and should not be cause to think less of any firm. However, running a business by paying undue attention to lobbyist directions is a situation destined for disaster. This is especially true when staff, clients, partners and associates take a back seat to the concerns of a politically engaged business.
The egos of the leadership combined with this issue have created a toxic environment at Edward Jones. The front-line, servicing advisors are under great pressure to generate commissions in regions becoming increasingly saturated with Edward Jones offices. The recruiting efforts are primarily focused on new college grads who are trained and licensed internally. When the recruits do not meet commission goals, the client accounts get randomly reassigned to other, generally new Advisors and the process repeats. This creates an obvious potential conflict of interest when it comes to client recommendations. This also creates financial burdens on the advisors. The functional effect of these issues is evident by the sliding ratings by JD Power.
In 2012, there are numerous options available to investors. The highly knowledgeable investor may be best served by utilizing discount online brokerage services; the high net worth investors may be best served by partnering with large, full service institutions. But the vast majority of investors fall between these extremes. Sadly, due to the political and bottom-line focus of many mainstream wirehouses (including Edward Jones), such clients are left wanting rather than being well-served.
Clients may be served quite well by an advisor at Edward Jones; but it is becoming more and more likely that clients may be poorly served by an advisor there and other wirehouses. Be careful of recommendations that focus on one or two fund families, corporate lingo regarding fund costs, inexperienced "Financial Advisors" who are taught product rather than process, and firm-specific products (e.g., "Advisory Solutions" at Edward Jones) that do not deliver meaningful value. In this time, more than any in the past it is important that investors retain professionals who act exclusively in the client's best interests - technically called "fiduciaries". At Edward Jones, the leadership is actively and fervently denying clients and advisors the opportunity to experience the full ramifications of a fiduciary advisor. As such, one might be best served to look elsewhere for unadulterated advice.