Posted by I recently transferred two accounts out of Edward Jones and noticed that all of the investments were in Lord Abbett mutual funds. Edward Jones is a company that does all of the investing for you. You give them access to your money, and they decide how to invest it based on your goals and risk tolerance. With a name like Lord Abbett, I always thought the company was based in the UK. But their headquarters are located in Jersey City, New Jersey. It turns out that the name comes from Leon Abbett and Andrew Lord who opened their investment house in November 1929. With that out of the way, I was still curious as to “Why so much Lord Abbett?”.
I discovered that Edward Jones (and many others), have a revenue sharing agreement in which Lord Abbett pays Edward Jones substantial corporate fees. In exchange, Lord Abbett receives enhanced business access, allowing their representatives to market their mutual funds directly to Edward Jones financial advisors. This is not necessarily a bad thing as Lord Abbett has a solid financial reputation. But it explains why there are so many Lord Abbett funds in the accounts. From the perspective of someone who has been managing their own investments for over 40 years, it feels restrictive to have all your investments with one firm. Another thing is that Lord Abbett only offers mutual funds, no ETFs.
This type of investing is fine if you don’t have the time or knowledge to do it yourself. Companies like Edward Jones have been very successful finding customers who meet this profile. They have optimized their cash flow through fees and revenue sharing agreements. I would only recommend having your investments managed if you are afraid to do it yourself. You just need to be aware that all financial services come with a hidden cost. Investment companies like Edward Jones use an automated percentage algorithm to allocate funds. This can leave some investments with only a few shares. I will be selling most of my Lord Abbett funds, especially the ones that have absurdly small allocations.