Mississauga, Ont.-based Edward Jones has grown its financial advisor ranks and assets under management (AUM) in recent years by adopting a common strategy in the investment industry that the company had long avoided: recruiting experienced financial advisors.
Historically, Edward Jones – a subsidiary of St. Louis, Miss.-based Edward D. Jones & Co. LP that has been operating as an investment dealer in Canada since 1994 – focused primarily on bringing in new talent to the business, “creating financial advisors from professionals who had a proven track record of success in other walks of life,” says David Gunn, country leader for the firm in Canada.
But that approach requires patience as much time is needed for advisors to be trained and to build up their books of business. In contrast, recruiting experienced advisors adds AUM and clients right away.
Accordingly, the firm’s change in direction a few years ago has contributed significantly to an increase in its numbers. In 2016, the firm had 660 advisors in Canada with $27.1-billion in total AUM. In late 2019, those figures rose to 866 advisors, with 100 experienced advisors having joined the firm during that time, and $36-billion in total AUM. (In 2009, Edward Jones had 688 advisors but only $13.7-billion in total AUM.)
In part, Edward Jones’s efforts to hire more experienced advisors may be due to the industry’s changing landscape, with greater focus being placed on offering clients a range of more sophisticated, holistic planning services.
“Expertise and experience in the business is likely increasingly looked at as an attribute,” says Ian Russell, president and chief executive officer of the Investment Industry Association of Canada.
Furthermore, wealth-management firms are looking to expand operations as much as they can to reduce costs and increase efficiencies. That often involves hiring more experienced advisors who already have profitable books of business, he adds.
In the past few years, Edward Jones has been bringing in both new and experienced advisors on board through a variety of strategies: referrals from existing advisors, digital and in-person events as well as targeted recruitment efforts by Edward Jones’s talent acquisition team. For example, Bank of Montreal announced late last year that it would eliminate 5 per cent of its workforce as part of a major cost-cutting effort. “So, we do have a team that will reach out [to affected advisors] in situations like that and let them know about our opportunity,” Mr. Gunn says.
As part of the recruitment effort, Edward Jones has been welcoming experienced advisors who are licensed by either the Investment Industry Regulatory Organization of Canada (IIROC) or the Mutual Fund Dealers Association of Canada (MFDA). Edward Jones has developed a training program to help all advisors integrate into the firm. For those who are MFDA-licensed, Edward Jones will help these advisors obtain their IIROC licence as the firm is solely an IIROC-licensed investment dealer.
“We’ve developed a tailored training plan for licensed advisors, right down to where they come from,” Mr. Gunn says. “If they’re from a Big Five bank-owned brokerage firm, we’ll tailor the training for them depending on what tools and resources they’ve used. If they’re coming from a bank branch and are MFDA-licensed, they may require potentially more robust training on working with equities, bonds and different investments, as well as planning tools.”
Advisors who join Edward Jones choose their compensation model on a case-by-case basis with clients (such as fee-based or embedded commissions) and have no set requirement for a minimum of client AUM. However, advisors are responsible for vetting whether they can build long-term relationships with clients and help them navigate a goals-based approach to investing.
Ian Stock, is an experienced advisor in Belleville, Ont., who joined Edward Jones in January 2017 after having spent almost five years at his previous dealer, BMO Nesbitt Burns Inc. (Prior to that, Mr. Stock had been an advisor with RBC Dominion Securities Inc. for almost eight years.) While Edward Jones advisors had reached out to him over the years for a potential referral, he eventually contacted Edward Jones on his own to express interest.
“I was looking for an opportunity for not only myself, but for my clients, so that I could put them in an environment [in which] the organization is [better] aligned with my values in terms of what we do for people,” he says
Because the firm doesn’t have or sell proprietary products, Mr. Stock says he’s better equipped to provide more personalized services and custom portfolios to clients. “We’re not into selling products. The clients’ interests always come first,” he says.
Mr. Stock was also inspired to make the transfer after learning about Edward Jones’s technology, particularly its cloud-based system and financial planning software. He also says the firm offered him and his assistant a private office that’s close to his home.