Edward Jones

Where is the best location for a new Edward Jones branch in Rogue Valley, Oregon?

Table of Figures:

Figure 1. 2019 Financial Planning & Advice in the United States (IBIS World).

Figure 2. 2020 Tapestry Profile of Rogue Valley, OR (ESRI).

Figure 3. 2016 Average & Median Net Worth by Age Range including primary home equity (Federal Reserve SCF Data).

Figure 4. Pie chart illustrating Baby Boomers are Edward Jones’ most profitable clients (Data above from Todd Montgomery & Don Prescott’s client demographics data at Edward Jones).

Figure 5. Dec 2018 Total Liquid Investable Assets for individual investors who have primary residence within zip codes of Rogue Valley, OR (Edward Jones).

Figure 6. 2020 Household by Net Worth and Median Age (ESRI).

Figure 7. Site A - Eagle Point, OR

Figure 8. Site B - Medford, OR

Figure 9. 2020 Map of Edward Jones branches in Rogue, Valley, OR (Google Maps).

Figure 10. 2020 Heat Map of competitive financial advising businesses in Rogue Valley, OR (ESRI Business Data).

Figure 11. 2020 Historical Traffic Layer (ESRI).

Figure 12. 2020 map of an available commercial space at 11160 Crater Lake Hwy, Eagle Point, OR 97524 (ESRI).

Photo 1. Potential branch site for Edward Jones in Eagle Point, OR.

Executive Summary:

The purpose of this story map is to explore the viability of planting a new Edward Jones office in Rogue Valley, OR. There are presently over 17 Edward Jones branch offices in the valley. This analysis will explore the history of Edward Jones, the need for growth as a firm, challenges the firm faces, and an analysis of the best location for a new branch in Rogue Valley. This story map will conclude with a recommendation for a new ideal location and data that will support a local branch based on demographic, financial, and competition analysis data.

Primary Market Research:

Edward Jones's purpose is to make a significant impact in the lives of customers, their loved ones and, as a result, their communities now and for future generations. Edward Jones serves their clients by making human-centered complete wealth management a reality, with the talent and technology required to adapt to the ever-changing economy and demographics of society. Edward Jones was founded in 1922 by Edward Jones Sr. who had a passion for creating a partnership with his employees rather than individuals who just punch a clock. The Edward Jones firm began in the financial district of St. Louis, Missouri and at the heart of Edward Jones Sr's business decisions was making sure clients came first. Edward Jones Sr.'s son, Ted Jones, became managing partner in 1968 and remained in that position for over twelve years. While Ted Jones was managing partner, the firm grew to over 300 branches. It was Ted Jones's insight that was bringing "Wall Street to Main Street." Ted's passion was getting out to the rural communities to make sure people had just as much access to information as the investors in large urban areas. Ted Jones's vision for growing Edward Jones branches was passed onto John Bachman in 1980 and under Bachman's leadership the firm reach 8,000 independent branch offices by the year 2001. Today, Edward Jones Investments is a fortune 500 firm that conducts business in the United States and Canada. Edward Jones manages $1 trillion in assets for American and Canadian families. Edward Jones has taken the small office in downtown St. Louis and grown it to over 19,000 branches across all 50 U.S. states and Canada.

Edward Jones is required to grow in order to remain relevant in the years to come. According to Edward Jones leadership, there are four "brutal facts" to the Edward Jones business model.

  1. Brutal fact 1: The challenge of clearly defining investor expectations. Shifts in expectation have come from the evolution of investor preferences. Decades ago, investors were dependent on brokerage firms to connect clients with information and tools. The internet created a vacuum in which investors no longer needed brokerage firms to provide information or the tools to execute trades. As a result, brokerage firms pivoted to become not only the tool to execute the trade, and access to the information, but they also had to provide advise. The entire full-service brokerage industry made a shift from selling products to providing solutions and advise. The current decade also is bringing additional shifts as more and more firms are providing investments and advise for free. The advent of the "Robo-advsior" will also continue to changes the financial planning landscape.
  2. Brutal fact 2: Edward Jones has made the business decision to grow organically. Organic growth in the brokerage arena means Edward Jones is hiring, training, and building each branch one Financial Advisor at a time. Edward Jones does not grow by mergers and acquisitions, as their leadership find it contrary to holding onto the Edward Jones culture. Growing organically is expensive and the attrition rate in the early years of a financial advisor's career is very high.
  3. Brutal fact 3: Edward Jones is currently based on one Financial Advisor and one Branch Office Administrator in each branch. The one Financial Advisor model has been a staple among Edward Jones offices going back to Ted Jones growing to 300 offices in the 1970s. The small branch team is then supported by the centralized home office. Edward Jones structures the offices to create a smaller client centered approach. The one Financial Advisor model, while expensive to execute, is the Edward Jones competitive advantage. The smaller branch strategy is also a tool to attract self motivated business entrepreneurs rather than employees.
  4. Brutal fact 4: The competitive and regulatory environment continues to evolve among financial services firms. The 1990s marked the repeal of the Glass-Stegall act which allowed banks to purchase brokerage firms. The Glass-Stegall repeal added new competition and the Dodd-Frank bill that came out of the 2008/2009 financial crisis created the most significant financial reform since the 1930s. The year 2014 and 2020 added new regulations around advisors acting as fiduciaries and insuring client's best interest are being kept. The added regulations continue to increase cost and the low cost digital competition continues to gain steam. Edward Jones will continue to balance a "high tech and high touch" approach. Traditionally, Edward Jones reviews a number of metrics before a new office location is planted. The firm reviews, bank assets within a 5 mile radius of potential office location, current Edward Jones offices already present in a town, and connecting the right advisor candidate to a community.

Secondary Market Reserach:

Industry Overview and Trends:

Figure 1. 2019 Financial Planning & Advice in the United States (IBIS World).

The chart above illustrates three key external drivers of the financial planning and advising industry over the previous 9 years and extending into 2024. The biggest change in external drivers is witnessed by revenue earned by advisors has compressed from 11% in 2012 and 2014 to roughly 2% in 2020, extending into 2024.

Customer Profile - Target Market Description

Figure 2. 2020 Tapestry Profile of Rogue Valley, OR (ESRI)

What age has the Money?

Figure 3. 2016 Average & Median Net Worth by Age Range including primary home equity (Federal Reserve SCF Data).

The U.S. Federal Reserve conducts research on wealth and in 2016 identified average wealth in the United States in comparison to age, with a significant increase in wealth being obtained by those age of 50 and over.

Branch Profitability Analysis:

Figure 4. Pie chart illustrating Baby Boomers are Edward Jones’ most profitable clients (Data above from Todd Montgomery & Don Prescott’s client demographics data at Edward Jones).

The data above defines profitability associated with age. Pareto Principle (also known as the 80/20 rule, the law of the vital few, or the principle of factor sparsity) states that, for many events, roughly 80% of the effects come from 20% of the causes. So in application to Edward Jones branch profitability, the top 20% of profitable clients (green) represent 80% of a branch’s profits. And when further analyzing “Green” clients, Baby Boomers represent the largest demographic within that client profitability category.

Where is the money located in Rogue Valley, Oregon?

TLIA in Rogue Valley, Or

Figure 5. Dec 2018 Total Liquid Investable Assets for individual investors who have primary residence within zip codes of Rogue Valley, OR (Edward Jones).

Internal Edward Jones research has identified total liquid investable assets of Jackson County, Or. and the top 5 cities in Rogue Valley, OR being Medford, Ashland, Central Point, Eagle Point, and Jacksonville.

After determining our most profitable clients as noted above, we researched what U.S. Census block groups, or local neighborhoods have the highest net worth above $200,000 and a median age above 50.

The three neighborhoods that met the criteria above are Medford, Ashland, and Eagle Point, Or.

Of the three cities noted above, our site comparison analysis compares the top two U.S. Census block groups, or local neighborhoods, who have consumers that used a financial planner within the last 12 months and own Individual Retirement Accounts (IRAs).

Our table identifies business indicators of success for financial advising and Eagle Point, OR boasts stronger data than Medford, OR. in every category.

Currently Edward Jones has only one branch in Eagle Point, OR compared to a saturated market in Medford, OR. as indicated by Figure 9.

To the right we show where Edward Jones currently has branches located within Rogue Valley, OR. The city of Medford, OR has eight branches while Eagle Point, OR has only one.

Only one Edward Jones branch in Eagle Point, OR creates a business opportunity for expansion.

Figure 9. 2020 Map of Edward Jones branches in Rogue, Valley, OR (Google Maps).

Figure 9. 2020 Map of Edward Jones branches in Rogue, Valley, OR (Google Maps).

Figure 10 illustrates the competition among financial advisors in the Rogue Valley shown as a heat map and brings to light the lack of competition in the town of Eagle Point. The lack of competition is critical to the successful launch of a new Edward Jones branch and can be seen in the high turnover of new advisors in the areas shown in bright yellow in the heat map. The orange and bright yellow areas of the heat map shown predominantly around Medford and Ashland show a higher degree of competition. The competition shown in the heat map includes the following areas: banks, brokerage firms, insurance agencies, and existing Edward Jones offices. Figure 10 shows just one more example of why Eagle Point can sustain a new branch location for Edward Jones and why areas like Medford and Ashland have become saturated with too much competition.    

The main takeaway in reviewing this historical traffic layer is that traffic is extremely light in the heart of Eagle Point, OR. Light traffic and easy access are critical when working with an aging population. Edward Jones serves Baby Boomers well in local communities by having simple directions, excellent parking, and having low drive times.

Recommendation:

A commercial property is available at 11160 Crater Lake Highway in Eagle Point, OR and provides easy access to surrounding neighborhoods, has excellent parking, and can be leased at $3,000 per month (VI Commercial Real Estate, LLC).

The monthly rent is inline with most Edward Jones offices in the Rogue Valley (Edward Jones).

ESRI

Figure 12. 2020 map of an available commercial space at 11160 Crater Lake Hwy, Eagle Point, OR 97524 (ESRI).

Photo 1. Potential branch site for Edward Jones in Eagle Point, OR.

Conclusion:

While opportunities among Rogue Valley, OR are limited, Eagle Point, OR rises to the top. Eagle Point, OR contains all the “secret sauce” for a successful Edward Jones branch as identified by age, net worth, those who use financial advising, and a lack of competition. These factors suggest a successful Edward Jones branch can be created. Additional factors that pushed Eagle Point, OR higher in the rankings include available space to rent, light traffic, and easy parking for Baby Boomers. 

References:

Eagle Point: City Specific Information (2020, August). Retrieved from  https://www.cityofeaglepoint.org/286/Where-Businesses-Soar 

Edward Jones: About: History (2020, August). Retrieved from  https://www.edwardjones.com/about/history.html 

Esri. (2020). ArcGIS: The mapping and analytics platform. From Esri:  https://www.esri.com/en-us/arcgis/about-arcgis/overview 

Esri. (2020). Tapestry Segmentation. Retrieved from Esri: ArcGIS:  https://doc.arcgis.com/en/esri-demographics/data/tapestry-segmentation.htm 

Federal Reserve: 2016 SCF Data (2020, August). Retrieved from  https://www.federalreserve.gov/data.htm 

Gambardellar, Anthony. (2020, July). IBISWorld Industry Report 52393: Financial Planning & Advice in the US. From IBISWorld  https://my-ibisworld-com.glacier.sou.edu/us/en/industry/52393/about 

Google Maps: Edward Jones office locations (2020, August). Retrieved from  https://www.google.com/maps 

Figure 1. 2019 Financial Planning & Advice in the United States (IBIS World).

Figure 2. 2020 Tapestry Profile of Rogue Valley, OR (ESRI)

Figure 3. 2016 Average & Median Net Worth by Age Range including primary home equity (Federal Reserve SCF Data).

Figure 4. Pie chart illustrating Baby Boomers are Edward Jones’ most profitable clients (Data above from Todd Montgomery & Don Prescott’s client demographics data at Edward Jones).

Figure 5. Dec 2018 Total Liquid Investable Assets for individual investors who have primary residence within zip codes of Rogue Valley, OR (Edward Jones).

Figure 12. 2020 map of an available commercial space at 11160 Crater Lake Hwy, Eagle Point, OR 97524 (ESRI).

Photo 1. Potential branch site for Edward Jones in Eagle Point, OR.