Should You Invest With Edward Jones?

Edward Jones Review, Complaints and Background

Senior couple planning their investments with financial advisor

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Edward Jones is a brokerage firm that provides investment advice. With many locations around the U.S., the firm is able to provide a personal approach to their clients in the communities they serve. Research Edward Jones reviews and history—and that of other firms—before choosing one to work with.

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 41,000 financial advisors and other employees in more than 16,000 branches around the country. Most offices are modest in size. They have one advisor with an assistant.

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. You should have a good working relationship with your advisor even if the firm is reputable.

One of the first questions you should ask a potential advisor is how they get paid. Edward Jones is paid 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, that offer a large choice of mostly high-quality funds. These funds have various pay structures through mutual fund share classes. They can be front-load funds, back-load funds, or load-waived funds with 12b-1 fees.

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, their history is not without scandal or complaints from clients.

The firm was hit with allegations that it didn't disclose 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 for these allegations.

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 be vastly improved since these lawsuits, but it's still best to use the "buyer beware" approach when choosing an advisor.

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.

NOTE: The information on this site is provided for discussion purposes only. It should not be taken as investment advice. This information does not represent a recommendation to buy or sell securities.