School of Hard Knocks: Edward Jones Still Sells Investments Door-to-Door

Turnover Is High, but the Company Is Hiring; Jim Haston Sees Some Sales Resistance

By MARY PILON

MONETT, Mo. -- At least three times a week, Jim Haston puts on a suit and tie and goes door-to-door in this town of 7,500. He’s pitching investments during the chilliest of bear markets.

In the 13 months since he started working the streets, Mr. Haston, 41 years old, has had dozens of doors slammed in his face. He has climbed a tree to rescue a stranded child. He has walked through summer heat and below-freezing winter weather. He has also attracted $2.1 million in new assets.

"I get nervous all the time," says Mr. Haston, a financial adviser for St. Louis investment firm Edward Jones. He sometimes breaks out in a sweat in his gleaming green 2001 Chevy pickup before he walks up to a house.

In the midst of the worst stock market since the 1930s, Edward Jones has been growing the old-fashioned way: knocking on doors. The company is unrivaled in that business. Whereas other securities firms are shrinking, its 12,000-broker force has added 998 brokers this year. It plans to add another 5,000 by 2012, according to Jim Weddle, the firm’s chief executive.

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Mary Pilon

Jim Haston, looking for investors in Monett, Mo.

In its school of hard knocks, Edward Jones puts all of it brokers through a five-day training session before sending them out on the street. They are taught to hold a golf ball in their hands so that knocks are loud and knuckles don’t wear down.

Sixty percent of the people Edward Jones hires quit in the first six months on the job, says Kevin Alm, head of training. He started out as a financial adviser in Minnesota one winter several years ago. "People are really nice to you when it’s that cold out," Mr. Alm says.

Mr. Weddle, the company’s managing partner, still knocks on the occasional door himself, and shadows advisers. Many years ago, he was chased by a bull while door-knocking in Connersville, Ind. He found refuge behind a tractor driven by a farmer.

While the rest of Wall Street was transformed by everything from low-cost trades to alternative investments, Edward Jones follows much the same model it did when it was founded in 1922. It features a combination of high fees and relatively conservative investments.

Jones brokers earn a salary during their first four months when studying for exams and in training. After that, the base pay begins dropping and is eventually replaced entirely by commissions and bonuses. The average salesperson, including some women, earns $65,000 a year, according to the firm.

Selling Stocks Door to Door Rain or Shine

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Jim Haston, a door-to-door financial advisor for Edward Jones Investments, hits the streets and attempts to get people warmed up to the idea of investing amid a very chilly economic landscape.

Edward Jones has avoided some market meltdowns. It didn’t put its clients in technology stocks before the dot-com bubble burst early in this decade. And it didn’t sell auction-rate securities, a market that collapsed last year.

This past fall, Edward Jones’s management asked the company’s brokers to personally call clients to apologize for losses in their portfolios. "Most people were really understanding," says Josh DeTar, 32, a new adviser in Joplin, Mo.

The firm has gotten in some regulatory trouble for its sales practices. In 2004, Edward Jones paid $79 million to customers as part of a regulatory settlement with the Securities and Exchange Commission in which it neither admitted nor denied wrongdoing. According to the allegations, Jones had failed to tell customers that mutual-fund companies were paying it to put customers in certain funds.

Mr. DeTar checks in at least once a month with all of his clients. He reads obituaries in the local paper and sends condolence cards.

Some of his contacts call to talk about their market stress. "Right now," he says, "It’s almost more like being a therapist."

Most Edward Jones advisers don’t have sales backgrounds. Their ranks have included a rocket scientist, a sandwich-shop supervisor and a pro baseball player. Frank Finnegan traded his Yankees pinstripes for a business suit in 1951. He’s still with the firm.

Extending a Fist

During a recent training session near the St. Louis headquarters, 65 advisers gathered in classrooms and broke into groups of 12. Lessons learned: Friends knock; solicitors ring the bell. Dogs should be greeted by extending a fist for the dog to sniff rather than a flat hand.

"A flat hand is an invitation to be bitten," trainer Amber Raney told the trainees, who wrote notes in thick, three-ring binders.

"What about the talkers?" asked a trainee, referring to loquacious customers "Just keep slowly walking away," Ms. Raney responded. "Once you hit the sidewalk, you should be fine."

It’s common wisdom at Edward Jones that streets lined with "big trees, fat squirrels and long cars" are often inhabited by older folks thinking about retirement, Ms. Raney said. Car seats and swing sets can mean a market for college savings plans.

Advisers take notes on tablet PCs that they carry with them. Before they got the computers, they carried books and were sometimes mistaken for missionaries.

Mr. Haston, an Air Force veteran, in his previous job worked in human resources for Tyson Foods Inc. During his first year at Edward Jones, Mr. Haston has rescued a dog from goldfish ponds as well as the boy in the tree. The owner of the dog became his first customer. He says he is "still working on closing the sale" with the mother of the boy.

Sale a Day

He tries to make a sale a day and to talk to at least 25 people, the minimum set by Edward Jones. It usually takes weeks to close a deal.

Typically, he warms up by hitting some local businesses. "I just stopped putting into my 401(k)," Steve Skaggs, the owner of a small Bible store in downtown Monett, told Mr. Haston on a crisp fall morning. "It feels like throwing money into an open flame." Mr. Haston spent 20 minutes talking to Mr. Skaggs and handed him an investing brochure and jotted down his information to follow up.

After the turndown, Mr. Haston hopped in his truck and headed out to Honeysuckle Street, a country lane with views of hay bales and tractors.

He spent nearly 20 minutes talking to a women peeking out from behind a screen door. He asked her where she keeps her savings. She said that a family member manages the money, but she’s thinking of moving it.

Mr. Haston tried to sell her on opening an Edward Jones account and putting the money in a municipal bond. "I got a tax-free I’m really liking right now," he told her.

She accepted a pamphlet but wasn’t ready to take the plunge. She gave Mr. Haston her phone number and said he was welcome to call her again about the account.

Over the next couple of months, Mr. Haston has phoned the woman twice but still hasn’t made a sale.

Mr. Haston has continued to work on the religious-store owner, too, visiting Mr. Skaggs three times over the two months. Still no sale. Mr. Haston isn’t discouraged, saying it’s all part of "establishing trust" with customers.

"That means I’m about halfway there," Mr. Haston says.

Write to Mary Pilon at mary.pilon@wsj.com