What Is Edward Jones?
Edward Jones is a full-service firm founded in 1922. It takes a personal approach to investing by placing advisors in many areas around the U.S. It provides investment advice and help with retirement planning. The firm built its seven-million-strong clientele by placing locations all around 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. It tends to use 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. 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 looking out for the interests of the Main Street investor, its history is not without scandal or complaints from clients. The firm was hit with allegations that it hadn’t disclosed conflicts of interest in 2004. It was alleged that Edward Jones failed to tell clients that the funds being recommended to them were selected because they offered Edward Jones payment. The choice was not made through a rigorous screening. Edward Jones paid a $75 million settlement with the SEC. Edward Jones was then sued in a federal court in 2018. Complaints claimed that the firm had “pressured its more 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 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.
The Bottom Line
Investors should do their homework by researching the history of a firm. Interview the advisor. Ask about their investment philosophy. Ask how they get paid.
