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What is Edward Jones?
Edward Jones is a full-service financial firm established in 1922. The firm takes a personal approach to investing by connecting clients with nearby advisors and fostering strong relationships. The company provides investment advice and helps with retirement planning.
Should you invest with Edward Jones?
The decision to invest with Edward Jones depends on location. You should trust the firm, but you must first trust your local advisor, 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 are paid. Edward Jones is compensated through revenue sharing with a network of mutual fund companies.
Note: Edward Jones is a major user of load funds, such as American funds. These funds have different payment structures through mutual fund share classes. These funds may be front-loaded, back-loaded, or no-load funds with 12b-1 fees.
Edward Jones does not invest client assets in only no-load funds, which may be better for investors than load funds that charge sales fees. It’s important to understand mutual fund fees before investing, regardless of your level of trust.
Edward Jones Reviews and Complaints
Although Edward Jones is a highly reputable firm, its history is not without scandals or client complaints.
In 2004, the company faced allegations of failing to disclose conflicts of interest. The Securities and Exchange Commission (SEC) claimed that Edward Jones did not inform clients that the funds it recommended were selected because they paid Edward Jones a commission, not due to thorough vetting. Edward Jones paid $75 million to settle this matter.
In 2018, four clients sued Edward Jones in federal court. They claimed that the firm “pressured over 16,000 brokers to switch clients in middle-income brokers from commission accounts to advisory accounts that charge up to 2% of assets annually.” The national average for fee-based advisors is over 1% of assets. The “reverse conversion” case was initially dismissed, but this decision was overturned on appeal.
Final Verdict
Edward Jones’ culture may have improved significantly since these lawsuits, but it’s best to use a “buyer beware” approach when choosing an advisor. Edward Jones offers agency services, but don’t assume that your service has an agency commitment unless the plan expressly states so. Meet with 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 showed that Edward Jones exceeds the average in overall investor satisfaction, as clients praised the firm’s people, products, and fees. However, client complaints often revolve around difficulty accessing funds and receiving support from the firm.
Which is better, Charles Schwab or Edward Jones?
Edward Jones focuses on advising its clients on investments, offering personalized advice, but this approach comes at a cost, in the form of higher fees. Charles Schwab also provides financial advisors, but you can choose to invest on your own if you wish. Schwab also offers over 4,000 no-load mutual funds and 2,000 commission-free ETFs.
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How does Edward Jones make money?
Edward Jones earns money through a variety of fees for its plans and services. The company earns from brokerage accounts through trading commissions. With directed and advisory services, Edward Jones earns 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 indicates that a typical investment portfolio would have achieved growth of 8.8% over the past 30 years and expects to see a balanced portfolio grow between 4.5% and 6.5% when factoring in historical averages and market conditions.
Methodology
We researched Edward Jones’s history, investment philosophy, and current and past offerings to develop a comprehensive review of the company. We also reviewed the company’s standing with the Better Business Bureau and nationally recognized rating companies, in addition to its fee schedule, past or pending lawsuits, consumer opinions, and investment goals to provide a comprehensive picture of what to expect when investing with Edward Jones.
Source: https://www.thebalancemoney.com/who-is-edward-jones-2466520
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