Edward Jones and American Funds: A 60-year revenue-sharing alliance

As the industry continues to shift toward fee-based accounts at registered investment advisory firms and away from the commissionable brokerage holdings that laid the foundation of retail investing decades ago, Edward Jones’ connection with American Funds has changed, too. The share of revenue that Edward Jones’ parent firm derived from American Funds Distributors declined to 11% in 2022 — the last year the partnership disclosed the figure publicly — from 25% in 2009, its annual reports showed. Among other alterations to the business over those years, Edward Jones launched its own Bridge Builder Trust funds in 2013.

The rise of those proprietary mutual funds reversed a pledge by the firm’s third managing partner, John Bachmann, that Edward Jones wouldn’t sell its own investment products. Today the Bridge Builder funds, designed to reduce portfolio concentration risk, hold more than $200 billion in client assets. Yet this growth has made it difficult for advisors to leave Edward Jones without a massive operational undertaking or, worse, a taxable event for their clients, noted Shelby Nicholl, a former Edward Jones director turned advisor recruiter and founder of Muriel Consulting. Edward Jones had a spike in advisor departures last year. Promoting the funds, advisor teaming and co-location is part of its strategy in response to those exits, along with particularly aggressive client retention tactics, she said.

That could work against it in an era where advisors crave autonomy.

“Edward Jones is not an independent firm. It is not offering advisors independence,” she said. “It is very much a captive W-2 environment where an advisor does not own his or her practice, so I think that is a huge trend that is against Edward Jones in the long term.”

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Where the rubber meets the road

For advisors, one aspect of independence revolves around the fund menu and its costs and conflicts.

Capital Group products like the American Funds Investment Company of America funds are built into advisor training at Edward Jones, with “all these beautiful charts that you could use and put in front of clients,” said Jason Barber. He was a third-generation advisor with Edward Jones but left in 2023 to launch Nacogdoches, Texas-based RIA Holistic Planning and an RIA services firm called Uptick Partners. Barber has fond memories of and gratitude toward Edward Jones but wanted to own his business, pair tax services with wealth management and operate with fewer conflicts. While he viewed American Funds’ performance and fees as “pretty competitive” for an active manager, he also saw how advantages accrued to both Edward Jones and Capital Group through the arrangement.

“When you go to the grocery store and you go down the chip aisle, do you notice that Frito Lay is always at eye level? Do you think that the grocery store did that because they think that Frito Lay is the best?” Barber said. “That doesn’t mean that they’re not the best. That just means that they paid for influence.”

To extend the analogy, he added, it’s possible other brands are excluded from the store altogether so as not to jeopardize the relationship or any revenue-sharing payments.

Every year, Edward Jones provides a glimpse into its arrangements through a revenue-sharing disclosure. Between 2021 and 2025, American Funds Distributors, the sales distribution arm of Capital Group, paid Edward Jones $598.2 million in such payments — the most of any company among the mutual fund and 529 plan firms that paid more than $1.5 billion in revenue-sharing outlays to Edward Jones in that span.

Based on its latest annual revenue-sharing disclosure, which stated that Edward Jones received a maximum annual asset fee of $3.50 for every $10,000 held by clients in American Funds products paying a total of $132.2 million in revenue sharing in 2025, the company’s clients have as much as $377.1 billion invested in American Funds vehicles. Neither firm confirmed the estimate.

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What doesn’t show up

Edward Jones no longer discloses the share of year revenue it derives from American Funds products, which had been decreasing — annual reports had previously listed the amount as a “significant revenue source.” And the Securities and Exchange Commission Form ADV for Olive Street Investment Advisors, an affiliate that manages Edward Jones’ Bridge Builder funds, does not include a brochure that would explain the conflicts of interest from Edward Jones selling those proprietary products. The company’s listing on the regulator’s database said SEC rules exempt it from filing that brochure.

When asked about Olive Street’s brochure exemption and Edward Jones’ annual revenue disclosure requirements, SEC representatives declined to comment on specific companies.

The disclosed revenue-sharing figures may look small compared to firmwide totals from Edward Jones and American Funds, anyways. In the last five years, Edward Jones generated $73.1 billion in revenue with, at year-end 2025, $2.5 trillion in assets managed on behalf of 9 million clients, according to its parent firm’s annual reports. For its part, Capital Group had $3.3 trillion in assets under management at the end of last year.

Independent investment research firm Morningstar has given Capital Group its top stewardship quality rating of “high,” and Edward Jones’ own Bridge Builder funds its second highest rating of “above average.”

Morningstar’s latest analysis of the Bridge Builder products praised their “favorable fees for open-end and exchange-traded funds, demonstrating a firm-wide commitment to minimizing costs and maximizing investors’ returns.”

On the other hand, the analysis of the 12 funds managed by Olive Street didn’t grade the other vehicle it oversees across its $203.8 billion in AUM, according to its SEC filing. That other fund is the Edward Jones Money Market Fund, which carries net annual fund operating expenses of 0.72% for retirement investors and 0.70% after certain waivers or reimbursements, the product’s prospectus showed. That cost is approximately triple the average expense ratio for money market funds of 0.24%, per the Investment Company Institute. And the industrial bank charter that Edward Jones secured earlier this year could make client cash holdings even more profitable to the firm through a sweep program and other banking services.

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A giant footprint in retail investment portfolios

Over the last three years, Edward Jones has generated $917 million in revenue through the Bridge Builder products and another $436 million from the Money Market fund, its annual report showed. Despite the momentum of record numbers of RIAs and client assets in the channel, Edward Jones remains a larger force in wealth and asset management than nearly any RIA. And the fund holdings in its clients’ portfolios have driven that position.

Among firms in the brokerage channel that provide fee-based advisory services to clients through what are known as managed accounts, Edward Jones is the No. 5 firm in the industry — behind only Morgan Stanley, Merrill, Fidelity Investments and LPL Financial — with just over $1 trillion in assets at the end of last year, according to research and consulting firm Cerulli Associates. That includes the $520.1 billion it has in “rep-as-advisor” programs, in which advisors clear every transaction with the client, according to Scott Smith, Cerulli’s senior director of advice relationships, making it the No. 1 firm in that category. It is No. 2 in mutual fund advisory programs, with $368.9 billion in basic allocated portfolios for mass-market investors, behind only LPL.

The Bridge Builder fund family gave Edward Jones “the ability to have more control of the investments they’re putting into their managed accounts, but still rely on outside managers” through the firms’ sub-advisory fund managers, Smith noted. That means they “can manage the experience and get the best of breed” in those relationships, whether with American Funds or otherwise. The incentive arrangements between Edward Jones and American Funds aren’t “a fatal flaw,” Smith said.

“When you’re building a long-term portfolio, you have to have confidence that the underlying managers are going to do what they say they’re going to do,” he said. “Solid consistency and reliability are the core message at both those firms.”

Smith added that Edward Jones’ purchase of the overlay management business of asset manager Natixis last year will give it further penetration into areas like unified managed accounts and other high net worth services under the leadership of Russ Tipper. He’s an Edward Jones principal and the firm’s head of products and solutions, as well as a former senior vice president of the Wealth Management Client Group at Capital Group. In a statement provided by representatives for Edward Jones, Tipper addressed the two firms’ relationship and how it has shifted over the years.

“Edward Jones is continually evolving our products and services to meet the needs of our clients,” Tipper said. “As their needs and our business evolve, our relationships with product partners evolve as well. These trusted partners act as an important extension of our firm, helping to strengthen our financial advisors’ acumen in investments as well as essential practice management capabilities.”

Representatives for Capital Group provided a brief statement but did not respond to questions about its revenue sharing and the size of its business with Edward Jones, and they didn’t make executives available for interviews.

“Capital Group believes that investors are better served with financial advice,” a spokesperson said. “We aim to be a trusted, long-term partner as an active manager with a long history of superior investment results, scale and organizational stability. We’ve helped millions of investors save for retirement and continue to do so.”

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Revenue sharing: A fact of life in the business

Throughout Capital Group’s more than 90-year history, the expansion of retail wealth management services has grown alongside its revenue-sharing arrangements.

But planners — especially fee-only planners, who place their clients’ interest first in every area of advice under the fiduciary duty and do not take commissions or register with any brokerage — see revenue sharing and other conflicts of interest as important but often misunderstood.

Edward Jones and American Funds are far from the only wealth management firm engaging in such practices, noted Natalie Pine. She’s the chair of the National Association of Personal Financial Advisors, a fee-only planner advocacy and professional development group, and CEO of College Station, Texas-based Briaud Financial Advisors.

However, those conflicts show why investors must try to figure out “not just the fees you paid your advisor, but the fee on the fee on the fee” from arrangements between fund companies, wealth management firms and any other service providers involved with an investment portfolio, Pine said. That’s because any of those costs wind up reducing the return of the investment. And that’s true whether Capital Group, Edward Jones or the outside sub-advisors it uses for the Bridge Builder funds (or any other company) is managing the fund. The shift to fee-based advisory accounts and the related confusing terminology often leave investors between “a rock and a hard place” when trying to evaluate some advisors’ fund recommendations, she said.

“There’s an incentive there to do it, and you would hope that everyone is like, ‘No, I’m going to pick the best fund, because it’s the right thing to do.’ But we all know that doesn’t happen,” Pine said. “Even though it may have a similar performance to a Vanguard fund, they’re charging fees that are going to go directly to their compensation, so they’re more likely to recommend it.”

Financial Planning requested interviews with Edward Jones executives or advisors and sent the firm 25 questions about its fund recommendations, advisor retention tactics and the exact time and location of Ted Jones’ legendary lunchtime meeting. Representatives for the firm pushed back against any assertion that revenue sharing or other conflicts hinder its services to clients.

“Edward Jones has offered American Funds products for approximately 60 years, beginning with a limited test market in the Midwest during the mid‑1960s before expanding nationally over time,” a spokesperson said. “Today, Capital Group/American Funds is one of eleven mutual fund strategic product partners on a modern, diversified investment platform that Edward Jones offers. We also offer active ETFs and separately managed accounts (SMAs) much like other investment partners on our platform. These types of offerings are consistent with our belief that clients should have choices in how their investment portfolio is structured based on their individual goals, risk tolerance and time horizon. At Edward Jones, our clients’ interests come first, and we believe in a quality-oriented, long-term investment philosophy. These values shape how we design our investment platform, how we work with product partners and how we continually evolve to offer clients choice, flexibility and transparency as their needs and the marketplace change. Financial advisors are not awarded any special incentives or bonuses tied specifically to any individual investment provider.”

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Edward Jones’ ‘stupefying’ history with revenue sharing

That may not have always been the case, though.

In December 2004, Edward Jones settled an investigation of its revenue sharing. Citing a 2002 sales contest that offered brokers their choice of a trip to one of 35 destinations worldwide based on their clients’ investments in seven companies’ products, SEC investigators accused the firm of taking revenue sharing and other payments from American Funds and other asset managers without adequately disclosing the arrangements to clients.

The firm agreed to pay $75 million in disgorgement and civil penalties under a settlement with the SEC, FINRA’s forerunner agency and the New York Stock Exchange. Its fourth managing partner, Doug Hill, stepped down in 2005. News reports stated that federal prosecutors dropped a criminal investigation as part of the regulatory settlement. In September 2006, the company also agreed to settle nine class action lawsuits over revenue sharing for another $127 million.

In the late 1980s, Edward Jones had set a goal of receiving 25% of the advisory fees that mutual fund managers earned from clients’ investments in “preferred families.” By the time of the SEC’s case a little over a decade later, those were: American Funds, Federated Investors, Putnam Investments, Lord Abbett Funds, Van Kampen Investments, Hartford Mutual Funds and Goldman Sachs, according to the settlement documents. The firms worked out several formulas in revenue-sharing arrangements that reached into the tens of millions of dollars from the seven fund families, which constituted between 95% and 98% of Edward Jones mutual fund sales.

The case brought unwelcome attention, including a Wall Street Journal article that pulled the curtain back on the previously undisclosed “secret payments” and a raging Jim Cramer column saying Edward Jones had “exhibited a stupefying two-facedness that makes me want to scream.”

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Flip-flopping on house funds

Ultimately, Edward Jones’ business of wealth management comes down to the “trade-offs” that make the company so different from its rivals that “few, if any, competitors would want to copy us,” as Bachmann, the firm’s third managing partner, put it in the introduction to the 2003 history of the firm, “A Book About Edward Jones’ History, Values and Culture,” by David Waller. One of those stances was, “We do not manufacture our own products,” Bachmann wrote.

“If you were a management consultant charged with finding ways of increasing our profitability, you would most likely say that we should sell our own mutual funds,” he wrote. But, “If we had a house brand in competition with a product from the best company in the market, it would cloud the issue as to whether we were recommending what was in the client’s best interest. Chances are the best product for the customer wouldn’t be the Edward Jones offering.”

At some point, the company’s executives changed their view of that trade-off. Its annual report lists the business risks of relying on sales of mutual funds and insurance in a general time of fee compression and the specific “operational risk and regulatory requirements” of proprietary funds. Today, Edward Jones uses the Bridge Builder funds “to lower client investment management expenses and reduce the concentration of client investments in third-party funds,” it said.

Perhaps Edward Jones earns a disproportionate share of the attention around conflicts of interest, but the subject comes up with almost any former Edward Jones advisor when they talk about leaving the firm.

The conversation around funds at Edward Jones speaks to the issue of portability for advisors’ clients, as in, “How am I going to move them, and how am I going to have to pay to have those assets managed elsewhere?” said Jason Diamond, the president of advisor recruiting firm Diamond Consultants. In that practice, as well as the incentives for proprietary funds or the products of firms that pay revenue sharing and the use of retention tactics that include litigation, Edward Jones isn’t alone in the industry. But that further contributes to the difficulty of getting many people to comment on those topics publicly.

“The firm is litigious — they have a reputation,” Diamond said. “Most advisors, if anything, are trying to fly under the radar when they leave. You don’t want to poke the bear.”

These dynamics have become more visible with departures from Edward Jones increasing in the past year.

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Inflection points

The number of advisors exiting Edward Jones reached a five-year high of 1,458 in 2025, including 673 advisors who joined a rival brokerage or an independent firm, according to a tracking report released by Nicholl’s firm last month using data from AdvizorPro. In response to the report, lawyers for Edward Jones sent Nicholl a cease-and-desist letter.

Nicholl, who grew up near the very first Edward Jones branch in Mexico, Missouri, said the company is “making moves to secure advisors” that are alienating those rooted in its traditional culture. Layoffs and outsourcing operations to India have caused some advisors to see their hallowed firm in a different light.

Nicholl is interested in how the company will respond to last year’s “dramatic inflection” of advisor retirements and departures, predicting “a lot of headwinds” for it based on the trends toward independence and ETFs and the rapid development of technology that isn’t the company’s strong suit. Another fork in the road could come up in three years, when managing partner Penny Pennington will reach the company’s mandatory retirement age of 65.

“What will be telling is, what happens in the next managing partner election,” she said. “Does a longtime Edward Jones leader win that election? Or does it go to a relative newbie at the firm? That will tell advisors a lot about whether or not Edward Jones is the firm they thought it was.”

Ex-advisors and other former Edward Jones employees say that the firm cultivates a warm, supportive environment for those who stay. But all bets are off after they leave, with former comrades vying to peel off clients to keep their accounts at Edward Jones and litigation a very real threat.

And the fund companies that have revenue-sharing arrangements with the firm play a major role in its family culture, according to one former Edward Jones advisor who asked to remain anonymous out of fear of retribution.

For example, Edward Jones’ Travel Awards Program allows advisors to bring their families along for “an awesome vacation, like, honestly, if I could still do those vacations, I would,” the advisor said. But during those getaways, advisors were required to attend fund wholesalers’ presentations. On those trips and at other events paid for by the fund companies, American Funds salespeople would often recount the hot dog origin story. Part of the reason that those funds have been so prevalent at Edward Jones is that they’re the “most superior funds on the platform,” the advisor said.

“In their defense, they don’t force you to use them, they just make it very easy for you to use them,” the former advisor said. “The most successful Edward Jones advisors, in a lot of ways, are the ones who just trust the process, as they say. ‘They’ve already shown you the path, just go do it.’ And it works.”

Barber, the former Edward Jones advisor, has “mostly fond memories” of his time at the firm, he said. But when advisors leave, “they divide your book among a dozen people who start calling your clients” with an objective “to drive a wedge between you and your clients,” he said.

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Family values

Yet Barber successfully left, launching an RIA and advisory services firm in March 2023 with his father Steve and cousin Taylor Pankratz. They have now reached 20 advisors and other employees and manage $1.2 billion in client assets at Holistic Planning and Uptick Partners.

“We wanted to be fee-only and reduce the conflicts of interest and to be able to offer tax planning and tax preparation,” Barber said. “That’s turned out to be a bet that has really paid off a lot, and we think we’re going to continue to grow.”

His grandfather, Paul, had started the practice in 1981, and the story of Ted Jones’ quip upon visiting the tiny East Texas office in 1983 that it “had the most production per square foot in the entire company,” remain cherished parts of the business. Barber’s grandmother Dottie was the practice’s first branch office administrator, and his aunt Julie Pankratz is its current director of operations. His father started in 1992, he came into the firm in 2011 and Taylor Pankratz joined in 2020.

Its “culture of camaraderie,” friendship and “willingness to help others” once set Edward Jones apart from other brokerages. But those elements are “common in the RIA world,” Barber said.

“When we were at Edward Jones, there was always this culture or feeling of, ‘I am a business owner, this is my business and I control my destiny,’ and that’s how we felt,” Barber said. “You can’t take the risk of that just disappearing someday.”