FIRMS
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Edward Jones Cuts C-Share Payouts
Firm encourages sales of A shares to long-term holders.
Edward Jones will cut its 40% payouts on C-share mutual funds to 30% or 35% effective Jan 1.
The cut is intended as an incentive for Jones reps to stick with A-share funds, which are still paid out at 40%. The firm will pay the higher 35% payout on C shares that eventually convert to A shares.
The St. Louis brokerage prefers to have clients pay once upfront instead of 1% every year for the life of the mutual fund, says Tom Miltenberger, head of Jones' mutual funds department. The average upfront load paid by the firm's clients is 3.2%.
"We encourage people to buy mutual funds and hang onto them for 15 to 20 years," Miltenberger says.
Class A shares account for 84% of sales at Jones. B shares are about 15%, and C shares make up the tiny remainder.
"Less than one-and-a-half percent of our mutual funds are Class C so [the payout cut is] almost a nonissue here," Miltenberger says.
But Jones reps say the new policy impacts some of their colleagues who planned on building a fee-like business via C shares.
"I know some brokers have quit over this, but if you look at Jones' population overall and the small volume of business in C shares, this is a nonevent," says one rep.
Another producer adds: "We do things differently at Jones. ... If [a rep] is really interested in C shares, maybe he should go somewhere else."
