Edward Jones to Allow Advisors to Charge for Financial Planning, Expand SMA

Edward Jones took two big steps this week to advance its steady march to align with common industry practices as it pursues more experienced advisors and higher net worth clients.

The changes will allow advisors for the first time to charge for creating and overseeing financial plans for customers and expand Edward Jones’ line-up of Separately Managed Account (SMA) programs for advisory customers, according to an announcement and a senior executive at the firm.

The St. Louis-based firm is initially allowing a small group advisors to charge clients as much as $3,600 annually for financial planning services. All 19,000 brokers will be eligible to participate by the end of 2025. 

In November 2023, Edward D. Jones & Co. began piloting a program to offer brokers’ clients financial plans crafted by its home office. Brokers were allowed to refer eligible customers to “wealth strategists” based in St. Louis, according to the company’s document filed with the Securities and Exchange Commission at that time. It also last year rolled out financial planning software from MoneyGuide to all of its branches. 

“That pilot delivered financial planning to clients through the firm’s headquarters and focused on testing and refining the fiduciary financial planning experience that branches now will be able to deliver directly to clients,” the company said in a statement on Tuesday. The home office financial planning will continue to be available to “certain clients,” a spokesperson said.

For the new financial planning services, the brokerage has set $250,000 in investable assets as the threshold for clients in advisory accounts to participate. It will roll out the program in “waves” with availability this month for a group of 600 advisors eligible clients, the company said in the press release.

Edward Jones is also making available new SMA options and adding flexibility for certain clients. It is introducing a home-office managed SMA and expanding its roster of third-party-managed SMAs by year-end to more than 300, up from 70 currently, according to Russ Tipper, an Edward Jones general partner who oversees investment advisory products.

Edward Jones is making the SMA policy changes, including allowing not exclusively “prix fixe” but also “a la carte” choices, to accommodate its acquisition of “high worth clients from our competitors” and “experienced financial advisors,” Tipper said. 

The new home-office SMA will be offered through the firm’s Unified Managed Account (UMA) program, which has minimum investment requirements of $300,000, $500,000 or $1 million, according to an Edward Jones’ filing with the SEC on September 30. 

The SMA will be available as a standalone strategy or as part of a diversified portfolio and includes professional tax management, including tax loss harvesting, and the ability to provide customization based on clients’ values and preferences.

Edward Jones will not charge fees for this SMA but will charge advisory fees through the UMA program. While the brokerage does not charge clients fees for the SMA Model Portfolios, it and its brokers do receive “indirect compensation through the advisory fees” in its UMA models, according to the SEC filing. But “some financial advisors receive a salary in addition to, or in lieu of, the advisory fees collected” from the UMAs, the company said in the filing.

The SMA program enhancements come after Edward Jones in November 2023 introduced a managed account program that—for the first time—gave its financial advisors discretion over client assets. 

In June, as part of “a step in creating greater adoption” of SMAs, Edward Jones shifted to a single fee schedule for all of its advisory programs, according to Tipper.

With that change, the brokerage eliminated an old platform fee and applied a new structure to be more transparent and consistent, a spokesperson said. The new platform fee starts at 0.05% for the first $250,000 and discounts based on assets in the customer’s advisory accounts. It replaced Edward Jones’ Portfolio Strategy Fee, which had started at 0.09% and was similarly cheaper for those with more assets but also varied depending on the advisory program and account type.