Is Edward Jones changing their focus and joining the ranks of the wirehouses on Wall Street by pushing advisors to increase production?

Last week, executives at Edward Jones announced increased production expectations effective next year for their 12,000 plus advisors. Get the new production numbers and reaction by advisors at RegisteredRep.com: Edward Jones Raises Production Expectations.

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An interesting solution to fixing the bonus problems caught my attention in March 17 Wall Street Journal; “Real Time Economics” column, as reported by Justin Lahart.

It seems that some firms have already begun compensating executives by putting bonus money into an escrow account, or “clawback”…in other words, the money is there but you have to earn it with good performance.

But economists Alex Edmans at Wharton, Xavier Gabaix and Tomasz Sadzik at NYU, and Yully Sannikov at Princeton have gone beyond the clawback approach and come forth with what they call “dynamic incentive accounts.” Top managers’ compensation would be placed into escrow accounts that would be invested in company stock and cash. Each month the account would be rebalanced, so that if the money in stocks declined due to the price of the stock declining, then the cash account would be drawn down to buy more stock.

Their thinking is that this would ensure that managers held company stock even if the firm’s value fell. (Would also solve the problem of managers’ stock options getting repriced lower after a decline, which only rewards them for failure).

Taking it even a step further, each month a fraction of the incentive account would vest and be paid out. After leaving the firm the account would continue to vest slowly, paying out after a number of years and preventing the problem of CEO’s pushing for short term gains as they retire.

I don’t really have an opinion on this at this point…just watching and waiting for it all to fall in place, but it makes for interesting reading. I’m sure we will see more creative “solutions” in the weeks to come….

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Greed and Entitlement!

I thought I had seen it all until last week’s “resignation” of Merrill’s CEO John Thain…the revelation of his secret last minute 4 billion dollar bonuses paid out in December (versus “normal” January bonus payouts)

…Oh, and by the way, he was simultaneously preparing a report of 15.3 billion dollar fourth quarter losses!

Meanwhile, down the block B of A is writing a request for more government bailout funds!! Was it indignation I felt? Shock? Embarrassment? Or even rage?

Actually, I don’t think I felt much of anything; perhaps some sadness or resignation to the reality of what has become the “norm.”

But, I was somewhat encouraged to see that Ken Lewis bought 200,000 shares of B of A. I still foresee a good percentage of Merrill’s 19,000 financial advisors joining forces with the Brokers on the Move from the big wire houses this year, and Willis Consulting is in the process of expanding and paving the way to service and place these “movers.”

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I’ve watched my share of Bowl games these past few days…not to mention the NFL playoff games, the NBA games and any other sport that happens my way.

When you look at the characteristics of a really good “superhero” athlete what comes to my mind is: Strength, Courage, Confidence and Pride along with a true conviction to succeed.

If the retail broker is the new “super hero” in the financial services recruiters arena, then conclusively, these attributes should be there for a “Broker on the Move.“

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