Should You Invest With Edward Jones?

Edward Jones Review, Complaints and Background

business men with tablets and graphs, advisors, Edward Jones
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Edward Jones is a brokerage firm that provides investment advice to individuals. With many physical locations around the United States, Edward Jones is able to provide a personal approach to their clientele in the communities they serve. Before working with an advisor, investors are wise to research Edward Jones reviews and history.

Who Is Edward Jones?

Edward Jones is a full-service brokerage firm founded in 1922. This investment firm takes a personal approach to investing by placing advisors in many locations around the United States. Some of the services they provide include investment advice and retirement planning. But is Edward Jones right for you and your investments? 

They built their seven-million-strong clientele by placing locations in communities all around the United States and Canada. Edward Jones has more than 41,000 financial advisors and other employees located in more than 16,000 branches 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?

The decision to invest with Edward Jones 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. Even if the brokerage firm is reputable, investors should have a good working relationship with their advisor.

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 network of mutual fund companies.

Edward Jones and Mutual Fund Fees

Edward Jones is a big user of load mutual funds, such as American Funds, which has a large selection of mostly high-quality mutual funds. It's important for investors to know that these funds have various pay structures through different mutual fund share classes. These can be front-load funds, back-load funds, or load-waived funds with 12b-1 fees.

However, Edward Jones does not consistently or completely invest client assets in no-load funds, which may be more advantageous for investors than load funds that have sales charges. It's important for investors to understand mutual fund fees before investing, no matter their trust level with the advisor.

Edward Jones Reviews and Complaints

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 or complaints from clients. For example, in 2004, Edward Jones was hit with allegations that it didn't disclose important conflicts of interest.

In the 2004 case, it was found that Edward Jones allegedly failed to communicate to clients that the funds being recommended to them 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.

In 2018, Edward Jones was sued in a federal court, where complaints claimed that the investment advisory firm has "pressured its more that 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 be vastly improved since the lawsuit but it is still the responsibility of the investor to heed the "buyer beware" philosophy when choosing investment advisors. To see Edward Jones reviews and customer complaints, see this link from Consumer Affairs.

Bottom Line

When choosing investment advisors, such as Edward Jones, investors are wise to do their homework by researching the history of the brokerage firm. Also investors should interview the investment advisor and ask about their investment philosophy and how they get paid. 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.