Edward Jones is introducing a new limited partnership structure for advisors and plans to raise $1.25 billion in the offering next year, marking the largest capital raise of this kind in the firm’s history.
The offering points towards a future when “limited partners will own a majority stake” in Edward Jones, according to an email to Edward Jones employees viewed by WealthManagement.com.
“In a move to strengthen long-term growth and reward contributions to the success of the firm, Edward Jones plans to expand associate participation in the firm’s capital structure and recognize high-impact contributions across the organization,” a company spokesperson said. “Modernizing our partnership goes beyond changes in capital or financial structure. It helps us align even more closely to our core values.”
Edward Jones’ ownership structure is unique for a company of its size, and has layers of complexity that come from a historical conviction among founding executives that employees share in the firm’s growth.
Currently, the firm has a small number of general partners overseeing day-to-day operations. Beyond that, a class of limited partners earns 7.5% per year on the principal amount of their capital contribution; those individuals will now be reclassified as “Class A” partners.
The new “Class B” limited partnership offer, according to the email, will come with variable payouts depending on the performance of the firm.
In addition to the new partnership plan, the firm is expanding its profit-sharing program with “eligible associates” who won’t be required to become partners and make a capital investment.
In the email, the firm also notified advisors that there will now be a 10-year term limit for managing partners. Current Managing Partner Penny Pennington took on the role in 2019.
Additionally, the firm assured advisors that any “significant transaction,” including a sale, a merger or a public offering, would require a majority vote from the firm’s partners, though the email included an assurance from Pennington that Edward Jones “is not for sale and won’t be for sale.”
“We—not shareholders—control our destiny,” Pennington wrote.