Edward Jones Faces Class Action Lawsuit Over Racial Bias
Edward Jones is facing a class action lawsuit from six Black advisors and former employees for the firm, claiming company policies put them in a position where they received “less compensation, fewer promotions and are terminated more frequently than their white peers.”
The lawsuit was filed in a federal court in Missouri by former Edward Jones employees Roland Martin, Elwis Johnson, Trevor Edwards, Shawna Knutson, Santoria Texidor and Alonzo Hinton, who are based throughout the country. According to the suit, the alleged discrimination they detail in the suit isn’t a “disparate impact case,” claiming that “Edward Jones knows that Black (financial advisors) are compensated less than their white peers, but has done little to correct this discrimination.”
The plaintiffs claim discrimination in the firm’s client transfer policy, which most often occurs upon an advisor’s retirement or when a senior advisor offloads client assets to a junior advisor to grant them a leg up in building a book of business (while advisors can request to make a specific transfer, the firm leadership oversees and approves the transfers).
According to the suit, advisors can, on average, receive “tens of millions of dollars’ worth of client accounts” when starting at Edward Jones, and senior advisors can choose which junior advisors receive their transferred assets (under the firm’s “GoodKnight” policy). The plaintiff claims this results in a reality where a “predominantly white (financial advisor) workforce transfers their client accounts” to other white advisors with the blessing of a “predominantly white Edward Jones Home Office, which tracks and approves” transfers.
The situation is made worse by Edward Jones hiring policies that the plaintiffs claim” explicitly encourage nepotism.” The result, they argue, is that Black advisors receive fewer assets, or none at all and the quality of those assets tends to be poorer.
“These disparities compound over time, with Black (financial advisors) receiving less compensation and fewer career advancement opportunities than their white peers,” the complaint read. “Their core story is common to Black (financial advisors) across the country.”
Edward Jones faced a similar lawsuit in 2022, in which several advisors claimed the firm’s “GoodKnight” program led to opportunities being disproportionately offered to white male advisors at the expense of other employees. Six years later, the suit remains ongoing.
In the latest case, the six plaintiffs each detail their challenges in building books of business within Edward Jones (all eventually left the firm), but some detail specific alleged instances of racism. In one case, Roland Martin detailed a meeting with the firm’s compliance director, regional leader and three members of the management team regarding his performance.
“After going through his existing book of business comprised of primarily Black households, the compliance director stated, ‘maybe the type of clients that you’re getting aren’t ideal for Edward Jones,’” the complaint read. “Plaintiff Martin understood this comment to be racial. Plaintiff Martin resigned from Edward Jones in September 2022 to start his own practice, where his ‘type of clients’ would be appreciated.”
An Edward Jones spokesperson said the firm strongly denies the allegations, “which do not reflect our values or how we operate as a firm.”
“Edward Jones takes its responsibility to promote fairness, respect and inclusion seriously and does not tolerate discrimination or bias in any form,” they said. “We intend to defend the matter and remain focused on supporting our associates, serving our clients, and acting in accordance with our purpose and values.”