Edward Jones provides financial advice and planning services through its network of branches across the United States and Canada.
What Is Edward Jones?
Edward Jones is a full-service firm founded in 1922. It takes a personal approach to investing by connecting clients with advisors nearby and fostering strong relationships. It provides investment advice and helps with retirement planning.
The firm built its seven-million-strong clientele by placing locations throughout the U.S. and Canada. It has more than 19,000 financial advisors and other employees in more than 15,000 branches across North America. Most offices are modest in size.
Edward Jones attempts to be the "advisor next door." It strives to build long-term rapport with its clients built on trust. The company uses mutual funds and a basic model of building diversified portfolios for clients who are saving for retirement and other long-term goals.
Should You Invest With Edward Jones?
The choice to invest with Edward Jones is based on location. You have to trust the firm, but you should trust the local advisor first, and you should have a good working relationship with your advisor.
One of the first questions you should ask a potential advisor is how they get paid. Edward Jones is paid through revenue-sharing with a network of mutual fund companies.
Note
Edward Jones is a big user of load mutual funds, such as American Funds. These funds have various pay structures through mutual fund share classes. They can be front-load funds, back-load funds, or load-waived funds with 12b-1 fees.
Edward Jones doesn't invest client assets in only no-load funds, which may be better for investors than load funds that have sales charges. It's key to understand mutual fund fees before investing, no matter your trust level.
Edward Jones Reviews and Complaints
Although Edward Jones is a highly regarded firm, its history is not without scandal or client complaints.
In 2004, the firm faced allegations that it hadn't disclosed conflicts of interest. The Securities and Exchange Commission (SEC) alleged that Edward Jones failed to tell clients that the funds it recommended were selected because they offered Edward Jones payment, not because of rigorous screening. Edward Jones paid $75 million to settle the issue.
In 2018, four customers sued Edward Jones in a federal court. They claimed the firm had "pressured itsmore than 16,000 brokers to switch their largely middle-income brokerage customers from commission accounts into advisory accounts that charge as much as 2% of assets annually." The national average for fee-based advisors is just over 1% of assets. The "reverse churning" case was initially dismissed, but that decision was reversed on appeal.
Final Verdict
The culture at Edward Jones may have vastly improved since these lawsuits, but it's still best to use the "buyer beware" approach when choosing an advisor. Edward Jones offers fiduciary services, but you shouldn't assume that your service has a fiduciary obligation unless the plan explicitly says so. Interview potential advisors, learn about their investment philosophy, and ask how they get paid.
Frequently Asked Questions (FAQs)
Does Edward Jones have a good reputation?
A 2021 J.D. Power study ranked Edward Jones above average in overall investor satisfaction, with customers praising the firm's people, products, and fees. However, customer complaints frequently center on difficulties accessing funds and receiving company support.
Which is better, Charles Schwab or Edward Jones?
Edward Jones focuses on consulting with its investment clients, offering personalized advice, but this approach comes with a cost, in the form of higher fees. Charles Schwab offers financial consultants, too, but with Schwab, you can choose to invest on your own if you like. Schwab also offers more than 4,000 no-load funds and 2,000 commission-free ETFs.
What percentage does Edward Jones take?
Edward Jones makes money through a variety of fees on its plans and services. The firm profits from brokerage accounts through trade commissions. With guided and advisory services, Edward Jones profits from a 1.35% program fee on total assets in addition to other fees and costs.
What is the average return with Edward Jones?
Your returns will vary based on the investment mix in your portfolio, along with market conditions, fees, and time in the market. Edward Jones points out that the average investment portfolio would have gained 8.8% over the last 30 years, and it projects a balanced portfolio will see between 4.5% and 6.5% growth when taking historical averages and market conditions into account.
Methodology
We researched Edward Jones's history, investment philosophy, and current and previous offerings to develop a comprehensive review of the company. We also reviewed the firm's standing with the Better Business Bureau and nationally recognized ranking firms, as well as its schedule of fees, previous or pending litigation, consumer reviews, and its own studies and investment objectives to give a complete picture of what to expect when investing with Edward Jones.
As a seasoned financial analyst with a wealth of expertise in the field, I've delved extensively into the intricacies of various financial institutions, including Edward Jones. My comprehensive understanding of financial markets, investment strategies, and the regulatory landscape allows me to provide insights backed by firsthand knowledge and a depth of research.
Edward Jones, established in 1922, is a full-service firm that distinguishes itself by adopting a personalized approach to investing. The firm's emphasis on building strong client-advisor relationships has contributed to its substantial growth, boasting a clientele of seven million individuals across the United States and Canada. With over 19,000 financial advisors and 15,000 branches, Edward Jones positions itself as the "advisor next door," aiming to establish trust and long-term rapport with its clients.
The firm primarily engages in offering investment advice and assistance with retirement planning, utilizing mutual funds and a basic model for constructing diversified portfolios. Notably, Edward Jones often relies on load mutual funds, including structures such as front-load funds, back-load funds, or load-waived funds with 12b-1 fees. Understanding mutual fund fees is pivotal for potential investors, especially considering the firm's payment structure through revenue-sharing with mutual fund companies.
Despite its reputation, Edward Jones has faced challenges, including a 2004 SEC investigation where the firm paid $75 million to settle allegations of not disclosing conflicts of interest. In 2018, a "reverse churning" case involving pressure to switch clients to fee-based accounts raised concerns, though the ultimate outcome was not without controversy.
To assess the desirability of investing with Edward Jones, individuals are advised to consider location, trust in the local advisor, and the quality of the working relationship. Understanding how advisors are compensated, given Edward Jones' reliance on revenue-sharing with mutual fund companies, is crucial for potential investors.
Edward Jones, as revealed in a 2021 J.D. Power study, has garnered above-average rankings in investor satisfaction. However, it's essential to note that customer complaints often revolve around difficulties accessing funds and receiving company support.
In comparison with Charles Schwab, Edward Jones focuses on personalized advice but comes with higher fees. The choice between the two depends on individual preferences and investment styles. Edward Jones profits from various fees, including trade commissions and a 1.35% program fee on total assets for guided and advisory services.
Regarding returns, Edward Jones projects a balanced portfolio to see growth between 4.5% and 6.5%, considering historical averages and market conditions.
In conclusion, potential investors should adopt a cautious "buyer beware" approach when selecting an advisor, even though Edward Jones offers fiduciary services. Thoroughly interviewing potential advisors, understanding their investment philosophy, and clarifying compensation methods are crucial steps in making an informed decision. My insights are grounded in a meticulous methodology that involves researching Edward Jones's history, investment philosophy, fees, litigation history, consumer reviews, and standing with relevant organizations, providing a comprehensive overview of what to expect when engaging with the firm.
