Who Is Edward Jones?

Get to Know Edward Jones Before You Invest

advisors_Edward Jones
Learn more about Edward Jones brokerage firm before investing. Getty Images

Founded in 1922, Edward Jones is a full-service brokerage firm that prides itself in taking a personal approach to delivering financial services.

They built their 7-million-strong clientele by placing locations in communities all around the United States and Canada. Edward Jones has more than 12,000 financial advisors located in more than 11,000 offices around the country. Most offices are modest in size and typically have one financial advisor with an administrative assistant.

In summary, Edward Jones attempts to be the advisor next door, so to speak. They seek to build long-term relationships built on trust with clients. They tend to use mutual funds and use a basic model of building diversified portfolios for clients saving for retirement and other long-term goals.

Should You Invest With Edward Jones?

As is the case with many brokerage firms, the decision to invest with them is more of a local decision than a national one. In different words, you need to trust the brokerage firm but it is the local advisor that should be trusted first.

One of the first questions you should ask a prospective advisor of any kind is: How do you get paid? One way Edward Jones gets paid is through revenue sharing with their a network of mutual fund companies.

For example Edward Jones is a big user of American Funds, which has a large selection of mostly high-quality mutual funds with various pay structures through different mutual fund share classes.

These can be front-loaded funds, back-loaded funds, or load-waived funds with 12b-1 fees.

Although Edward Jones is generally a highly-regarded brokerage firm looking out for the interests of the Main Street investor, their history is not without scandal.

In 2004, Edward Jones was hit with allegations that it didn't disclose important conflicts of interest.

When recommending mutual funds to clients Edward Jones allegedly failed to communicate to clients that the funds being recommended were selected, not through a rigorous fiduciary screening, but because the funds offered Edward Jones payment.

Edward Jones paid a $75 million regulatory settlement with the SEC for the failed disclosure allegations.

The culture at Edward Jones may be vastly improved but it is still the responsibility of the investor to heed the "buyer beware" philosophy when choosing investment advisors.

For a good overview of choosing investment advisors see this article on Types of Investment Advisors.

Disclaimer: The information on this site is provided for discussion purposes only, and should not be misconstrued as investment advice. Under no circumstances does this information represent a recommendation to buy or sell securities.