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Edward Jones Trims Fees for Mass Affluent Clientele

Edward Jones, one of the nation’s largest brokerages, is shaving fees for mass affluent clients come October — albeit by just a hair.

Edward Jones headquarters building with logo in front and building in background
Photo by JHVEPhoto via iStock

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Just a little off the top, please. 

Edward Jones is the latest brokerage to trim fees in an industry that has long withstood the price wars that plagued other segments. Come October, one of the nation’s largest brokerages is shaving prices — albeit by just a hair — for its mass affluent clientele. Annual fees will shrink to 1.2% of assets under management, down from 1.25%, for customers that invest between $500,000 to $1 million with the company, according to filings. Minimum monthly fees tacked onto smaller accounts are also getting eliminated. 

An Edward Jones spokesperson said fee transparency is a top priority and that transitioning away from different pricing tiers helps the company offer “increased flexibility.” 

Party in the Back

We wouldn’t call it a fire sale, but any savings passed on to clients can lead to larger compounded returns. Fees tend to tick up for clients with fewer assets, and can decrease for wealthy investors. Edward Jones charges just 50 basis points for accounts over $10 million, according to reports. The company has nearly 20,000 advisors that handle some $2.1 trillion in assets, which puts it on par with powerhouse wires like Morgan Stanley and Merrill Lynch.

“On the surface, it appears that small cuts like this have the potential to attract more assets,” said Cecilia Williams, COO at the wealth manager Halbert Hargrove. “If it encourages an investor to regularly add to their account and stay disciplined, they can see the power of compounding at work over long time periods.”

The 1% fee has been a standard in the financial industry for decades, but not everyone is certain it will continue. Morningstar CEO Kunal Kapoor said market returns are expected to drop significantly over the next decade, which will put increased scrutiny on the value advisors provide their clients — and the fees that they charge them. “Are we crying ‘wolf’ again?” Kapoor asked in June. “Let me assure you of this: The wolf shows up eventually.”

High and Tight: While financial advisors haven’t been hit with the same fee pressures as other financial services segments (à la the fund industry over the past decade), firms are trying to stay competitive. In some cases, advisors are having to introduce additional services to justify the same rates. It’s the inverse of price cutting, but can still add extra value for clients. 

“Over the last decade, we’ve seen lots of headlines signaling fee compression, but what we’ve really experienced is the industry evolving to provide more value for their fees,” Williams told The Daily Upside.