Edward Jones struggled to attract new client households in the second quarter, even as its total advisor headcount continued to grow.
The firm reported 27,000 net new households in the second quarter, down 55% over the same period last year, according to a filing with the Securities and Exchange Commission on Friday.
The St. Louis-based wealth manager reported a 4% increase in its total advisor headcount year over year, up to 20,309 advisors by the end of the second quarter. During that period, the firm saw an attrition rate of 6.4%, up from 5.3% in the same period last year.
In its filing, the company attributed the elevated attrition rate to an increase in the number of financial advisors retiring from the company, reflecting a broader trend in the industry.
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Edward Jones reported $17 billion in net new assets in the second quarter, a 10% decline year over year. Despite a decline in net new assets, the firm reported a 12% increase in total client assets under care, up to $2.3 trillion by the end of the second quarter.
The firm said the decline in net new assets was a result of higher asset outflows.
“These outflows are impacted by a variety of factors, including, without limitation, an aging client base and generational wealth transfers outside the firm, macroeconomic volatility, inflation and consumer spending,” the company wrote in its latest filing.
Edward Jones’ quarterly revenue rose by 9% to $4.2 billion in the second quarter. An increase in fee revenue made up most of the growth. More than $3.5 billion of revenue came from fees, up 10% year over year.
A push to serve higher net worth clients
Edward Jones said in its latest filing that average client assets under care rose 9% year over year, a gain fueled by both market performance and the addition of new client assets.
That growth dovetails with the firm’s broader strategy shift to cater to wealthier investors. Earlier this year, Edward Jones unveiled plans for a specialized service aimed at individuals and families with $10 million or more in investable assets.
The initiative, branded Edward Jones Generations, offers an expanded menu of sophisticated services, including tax planning, estate and business succession strategies, cash-flow modeling and philanthropic consulting. To deliver on that promise, the firm has partnered with accounting powerhouse EY and the law firm Husch & Blackwell.
Clients in the program also gain access to investments in alternative markets such as private equity, private credit and private real estate — asset classes that have become a growing focus for many large wealth managers seeking to diversify client portfolios and enhance returns.
The pivot toward serving high net worth clients follows a policy shift announced last fall, when Edward Jones revised its fee structure for accounts holding more than $250,000. Under that model, qualifying clients can now receive comprehensive financial planning for a flat annual fee of $3,600, positioning the firm to offer deeper, more holistic advice to those with substantial assets.
A restructuring plan pushes compensation costs
Edward Jones’ total operating expenses rose by 10% year over year to $3.8 billion, cutting into the company’s net income.
Compensation and benefits made up a majority of the company’s expenses, totalling $3 billion in the second quarter. That figure, up 11% year over year, was elevated by the company’s “Enterprise Reimagined” restructuring plan.
Edward Jones announced the multiyear plan earlier this year, which includes an effort to reduce staff at its home office and to streamline operations.
In its latest filing, the company said that separation costs associated with the restructuring were partially responsible for the increase in compensation expenses. Higher average wages and increased healthcare costs also pushed total expenses higher for the company in the second quarter.
