Exclusive: Edward Jones Pilots Shared Office Space for Brokers
Real estate cost savings and broker demand for more collaboration appear to be putting pressure on Edward Jones to revisit its single-broker model, despite concerns that cohabitation could lead to intra-office competition.
The testing is on a “limited basis,” and brokers in the same branch will still not be allowed to form teams, according John Lee, head of strategic branch real estate for Edward Jones.
“Edward Jones financial advisors who elect to co-locate their branch teams in shared real estate with other financial advisors will continue to maintain discrete client relationships, consistent with our long-standing model,” Lee wrote in a prepared statement. “By sharing space with other branch teams, financial advisors will have the opportunity to learn from one another and grow their respective businesses while building deep individual client relationships and serving their communities.”
A spokeswoman for Edward Jones declined to comment on how many brokers are eligible for, or are participating in, the test program. She also declined to say which brokers would be eligible to participate in the pilot.
Jones had 15,361 branch offices in the U.S. and Canada at the end of 2020 that are generally leased on a five-year basis, according to its most recent company annual report. To be sure, a small number brokers had been co-working but generally on a short-term basis as the company waited to add additional offices.
The company, which is one of the last large firms operated as a partnership, noted that profitability could be affected by increases in rent at its offices, particularly as it focuses on expanding in major metropolitan areas.
“Further, the Partnership is currently focused on placing financial advisors in urban markets, which tend to have higher rent costs and could negatively impact the Partnership’s profitability,” the company wrote.
Jones is rolling out the opportunity to at least some of its sales force on Monday via videoconference, according to one broker who spoke favorably of the program as they want to have their son eventually take over the practice. The process would be easier if they were both working in the same location, according to the broker, who spoke on condition of anonymity.
Some brokers, however, have in the past complained of market cannibalization because of the number of Jones offices in some cases were already too crowded in some of the small towns or remote locations the firm serves.
Even the consideration of loosening its restrictions on office space marked a “massive change” for the relatively middle-of-the-road firm, according to Louis Diamond, an industry recruiter with Diamond Consultants. Edward Jones may have felt pressure from some large producers or prospective recruits who wanted more of a collegial office environment, he said.
“It seems like an antiquated model and it doesn’t really make sense for someone who wants to have camaraderie or a team around them,” Diamond said. “It seems like a limiting factor to be so strict about it.”The pilot comes also as Jones and other major brokerage firms are contemplating what the workplace will look like as Covid-19 restrictions begin to thaw. Raymond James is piloting flexible office space by consolidating two Houston offices and redesigning the space around hot desks.
Jones itself froze some new real estate leases during the pandemic, although it began cautiously renegotiating some leases in the third quarter.
Because its brokers were in single offices with just one other branch office administrator, they were allowed to keep their offices open through the pandemic, although Jones had initially barred them from meeting with clients and prospects in person. Only a small portion shifted to work from home, a spokesman said previously.