Edward Jones boosted advisory-based fee revenues and average client assets under care compared to last year, but also increased outlays to employees and operations, according to its first-quarter regulatory update.
The St. Louis-based wealth manager, a private partnership operating in the U.S. and Canada, reported an 18% jump in asset-based fee revenue to $3.9 billion, driven mostly by advisory program fees. Those results drove a 12% increase in total net revenue across the firm’s businesses to $4.7 billion for the quarter.
“The increase in asset-based fee revenue was primarily due to growth in advisory programs with higher average market levels and the continued increase in investment of client dollars into advisory programs,” Edward Jones wrote in the update to the Securities and Exchange Commission.
The results led to a year-over-year increase in net income before allocations to partners of about 5.5% to $541 million, and a 12% increase in total assets under care to $2.4 trillion.
The gains, however, were offset by another quarter of increased spending on payouts and operations. Total operating expenses were up 13% to $4.1 billion, “primarily due to increases in compensation and benefits expense, variable compensation and communications and data processing expense,” the firm wrote.
Financial advisor compensation accounted for about $1.9 billion of the operating expenses, and spiked partly on an “increase in revenues on which commissions are earned,” which refers to commissions from the sale of mutual funds, insurance products, and the purchase or sale of securities, according to the filing.
The cost increases come with other efforts Edward Jones has been making to retain its advisors and entice more to join. Last year, the firm announced to employees that it would introduce a new limited partnership structure to expand associate ownership in its capital structure. It also began trimming some home office roles it said were redundant, while keeping its advisor base intact.
The firm did end the first quarter with 1% more advisors than the same period last year, with 20,550 advisors in the U.S. and Canada. In contrast, it had 5% fewer home-office employees, at 8,907.
In the meantime, it continues to invest in projects to expand its client base.
In a release accompanying the earnings filing, the firm noted its efforts to open Edward Jones Bank, following conditional approval from the FDIC and the Utah Department of Financial Institutions in March.
“For over a century, clients have relied on Edward Jones financial advisors for trusted investment and retirement guidance, and we recognize when client needs are shifting,” David Chubak, head of wealth management and field management at Edward Jones, said in a statement. “They want a more complete view of their financial lives. With the approval of our bank application, we can now deliver even better on what our clients are asking for.”
It also highlighted a partnership with Moment, a fixed income trading and portfolio management platform, and investments in artificial intelligence-driven financial technology solutions through its venture capital division. Those investments are in 15 companies, including firms like Grantd, a platform for advisors to manage clients’ equity compensation, such as stock options.
The wealth manager, known for its main street presence across the U.S., also last year opened a new private client service division called Edward Jones Generations to better serve high-net-worth individuals and families.
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