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Updated on Tuesday, September 21, 2021
Janney Montgomery Scott is a dually registered investment advisor and broker-dealer. The firm offers portfolio management, financial planning, retirement plan consulting and consulting services, and it can also process investment trades for clients. Janney Montgomery Scott is owned by The Penn Mutual Life Insurance Company, so its advisors also have access to life insurance products. Headquartered in Philadelphia, the firm has over 1,100 advisors spread up and down the East Coast.
The bottom line: Janney Montgomery Scott is an investment advisor and broker-dealer with a wide range of investment programs and financial planning offerings.
- Creates customized portfolios and financial plans
- Offers both in-house investments and those from third-party partnerships
- Accepts small accounts, requiring as little as $5,000 for some programs
|Assets under management (AUM): $62,029,497,716|
|Minimum investment: Varies by program, starting at $5,000|
|Individual investor to advisor ratio: 148:1|
|Fee structure: A percentage of AUM, fixed fees, commissions, other (fee plus commission)|
|Headquarters: 1717 Arch Street|
Philadelphia, PA 19103
Phone: (215) 665-6000
All information included in this profile is accurate as of September 10, 2021. For more information, please consult Janney Montgomery Scott’s website.
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Overview of Janney Montgomery Scott
Janney Montgomery Scott launched in 1832 as a broker-dealer. The company once held the second-oldest seat on the New York Stock Exchange. In 1982, The Penn Mutual Life Insurance Company purchased Janney Montgomery Scott, which now operates as a wholly owned independent subsidiary of Penn Mutual.
Janney Montgomery Scott has over 2,000 employers, more than 1,100 of whom serve in investment advisory and research roles. Meanwhile, nearly 1,600 work as registered representatives for the company’s broker-dealer service. Additionally, nearly 1,000 of the firm’s employees are licensed to sell insurance.
Janney Montgomery Scott’s pros
- Wide variety of investment options: Janney Montgomery Scott not only offers a range of potential investments thanks to its broker-dealer service, it also can create portfolios using strategies and funds from outside third-parties.
- Customized portfolios: Rather than offering one-size-fits-all funds, the advisors at Janney Montgomery Scott customize their portfolio recommendations based on a client’s unique situation and goals.
- Low investment minimums: Investors can access one of Janney Montgomery Scott’s portfolio management programs with just $5,000. Even the firm’s highest program minimum is just $150,000, which is much lower than other advisors who could require $1 million or more.
- Numerous awards: Janney Montgomery Scott has won numerous awards over the years including recognition on lists such as Barron’s Top 40 Wealth Management Firms, Financial Times Top 400 Advisors and Forbes America’s Top Women Advisors.
Janney Montgomery Scott’s cons
- High potential fee minimums: Janney Montgomery Scott’s annual management fee can go as high as 2% a year, plus an additional sub-advisory fee charged by third-party managers. In comparison, the average RIA charges 1.17% a year according to a study by RIA in a Box. While Janney Montgomery Scott notes that its fees are negotiable, pay attention to what you will be charged when you sign up given the firm’s high maximum rate.
- Advisors earn commissions: Janney Montgomery Scott also makes money through brokerage commissions, which could create an incentive to make more trades than needed.
- Possible conflict of interest with Penn Mutual Life products: Some of the Janney Montgomery Scott advisors also work as life insurance agents. Since Janney Montgomery Scott is a subsidiary of Penn Mutual Life, agents could have an incentive to promote those products over those of other companies, creating a potential conflict of interest, though the firm notes that the firm does not receive additional or special compensation for recommending Penn Mutual Life products.
What types of clients does Janney Montgomery Scott serve?
Individuals make up the vast majority of Janney Montgomery Scott’s clients. The firm works with both non-high net worth and high net worth individuals, with high net worth being individuals defined by the SEC as those who invest at least $750,000 with an advisor or have a total net worth over $1.5 million.
The minimum initial investment to work with Janney Montgomery Scott depends on the program. The lowest program starts at $5,000 while the highest program minimum is $150,000.
Services offered by Janney Montgomery Scott
Janney Montgomery Scott primarily offers investment advisory and brokerage services. The firm offers numerous investment programs, including wrap fee programs where all investment costs are covered under one flat fee, partnerships with third-party managers and goal-based portfolio solutions. The advisors at Janney Montgomery Scott can work with clients on a discretionary basis, where they can make trades for a client without their permission each time, and on a non-discretionary basis, where a client must approve each trade.
Janney Montgomery Scott also offers financial planning. This service can be offered as either a lead-in to investment management services or to give clients a plan they can manage themselves.
In addition, Janney Montgomery Scott operates as a broker-dealer, so it can process investment trades directly for its clients and provide investment research. Some of the company’s advisors are also insurance agents so they can sell insurance products, including those from the firm’s parent company, Penn Mutual. Last, Janney Montgomery Scott provides retirement plan advisory services and consulting.
Here is a complete list of services offered by the firm:
- Portfolio management and investment advisory services
- Financial planning
- Retirement plan consulting
- Broker-dealer services
- Life insurance
- Selection of other advisors
- Education seminars
How Janney Montgomery Scott invests your money
Janney Montgomery Scott does not have an underlying investment philosophy itself, but rather invests to meet the individual goals of each client. The firm does not offer pre-designed funds and instead customizes its investment recommendations to each client. When a new client meets with an advisor, the advisor will get to know the client’s goals, challenges and financial attitudes to design a plan.
Advisors could build client portfolios using funds from Janney Montgomery Scott as well as outside third-party advisors.The firm’s brochure notes that it has access to 6,000 potential investment strategies from Morningstar, offering clients a wide range to choose from. The firm could also use mutual funds, exchange-traded funds (ETFs), alternative investments, stocks and bonds.
Janney Montgomery Scott offers multiple investment programs, split across three main categories. Here’s an overview of the three categories and their strategies:
|Janney Montgomery Scott Investment Program Categories|
|Professional Money Management||A professional advisor designs and manages your investment portfolio, using stocks, bonds, mutual funds, ETFs and/or strategies from outside advisors; could also partner with an outside advisor you’re already working with.||$100,000 to $150,000|
|Asset Allocation||These programs invest your money into pre-designed funds with specific strategies, like Equity Growth or Diversified Income.||$5,000 to $25,000|
|Internal Portfolio Management||These programs are less hands-on and geared toward clients with investment knowledge, like a non-discretionary program where you need to approve trades and a program for employees working at other financial firms.||$10,000 to $50,000|
Fees Janney Montgomery Scott charges for its services
Janney Montgomery Scott primarily charges clients based on a percentage of assets under the firm’s management, which is deducted from a client’s portfolio each year. The firm lists its maximum annual fee could be 2% a year, but does not list any breakpoints based on portfolio size. Janney Montgomery Scott does note that its fees are negotiable and are something that you would discuss with your advisor upon joining. If you end up working with a third-party advisor as part of your portfolio, you could owe an additional sub-advisory fee on top of the advisory fee you pay to Janney Montgomery Scott.
Most of the Janney Montgomery Scott advisory programs are wrap fee programs. This means you pay one asset-based fee, which also covers other standard investment costs like trade execution commissions, custody fees and reporting. Depending on how you set up the account, you could be responsible for some additional fees, like for using a third-party custodian, but most are covered by the wrap fee. Clients can also join a non-wrap fee program, which means they would pay extra for these investment costs on top of the investment advisory fee.
For other services like standalone financial planning and retirement plan consulting, Janney Montgomery Scott could charge one-time project fees as well as annual flat or asset-based fees for ongoing engagements.
Janney Montgomery Scott disciplinary disclosures
Janney Montgomery Scott reports a number of disciplinary disclosures. As a registered investment advisor, the company is required to report on its Form ADV filed with the SEC any criminal, regulatory or civil events involving the firm, its employees or its affiliates that have occurred within the last 10 years.
Janney Montgomery Scott’s disclosures are generally all related to regulatory issues, such as allegations that it did not have the right reporting systems or failed to give the proper trading discounts, or issues with former employees. In nearly all cases, the firm paid a fine without admitting wrongdoing or self-reported the issue.
Here are the disclosures the firm has recorded within the last decade:
- July 2011: The firm agreed to pay a $850,000 sanction to FINRA related to allegations it had not had right procedures in place to prevent the misuse of non-public investment information.
- May 2015: Janney Montgomery Scott self-reported that it had failed to provide eligible customers the proper sales charge waivers for mutual funds, overcharging them by $1,030,235. The firm paid back the overcharge plus interest.
- February 2016: Without admitting wrongdoing, Janney Montgomery Scott paid the SEC a $500,000 sanction related to findings about the firm’s self-reporting of anti-fraud provisions as well as inadequate due diligence for the underwriting of certain municipal securities.
- June 2018: The firm self-reported that customers eligible for a discount to purchase certain mutual fund shares did not receive the discount, so they were overcharged by $253,923. Janney Montgomery Scott returned the overcharge plus interest, and agreed to review its procedures to prevent it from happening in the future.
- March 2019: Janney Montgomery Scott lost a verdict in a civil court stating that it did not properly handle the distribution of the assets for a deceased client. Janney Montgomery Scott still believes it handled the instructions properly and this civil case remains ongoing in appeal.
- March 2019: The firm paid NASDAQ $27,500 related to allegations it had not maintained a proper side-side trading order between 2015 to 2017, though Janney Montgomery Scott did not admit wrongdoing.
- April 2020: Without admitting wrongdoing, the firm paid the State of Massachusetts a fine of $286,622.02 related to allegations it had failed to oversee a former advisor, who did not have the proper sales practices for mutual funds. As part of the settlement, the firm agreed to review its policies and procedures.
- September 2020: The firm paid FINRA a $90,000 sanction related to allegations it had submitted incomplete or inaccurate records to the Order Audit Trail System.
- October 2020: The firm faced an entry order with the State of Connecticut, as the state alleged a former employee of the firm acted as an executor of a client’s will in contradiction to the firm’s supervisory policies. The firm reimbursed $108,459.68 to the estate of the affected client and also paid a fine to the state government.
For more information on the firm and further details on its disclosures, visit Janny Montgomery Scott’s IAPD page.
Janney Montgomery Scott onboarding process
- Contact a local advisor: The first step to working with Janney Montgomery Scott is to connect with one of the firm’s local advisors. On the firm’s website, you can search for advisors based on your location. This will pull up a list of advisors in your area, including their contact information and their website address, so you can schedule a meeting.
- Have an initial meeting: During this meeting, the advisor will ask you to share your goals, risk tolerance, concerns and what you are looking to accomplish with your investment portfolio. From there, they will design a portfolio recommendation using the various options from Janney Montgomery Scott and its third-party partners. When the advisor presents your portfolio recommendation, you will also negotiate their fee.
- Sign on and stay in touch: If you are happy with the recommendation, you can sign on to the program and the advisor will manage your portfolio, based on the terms of the Janney Montgomery Scott program you use. Your advisor will then meet with you at least once a year to discuss your portfolio and they will also send you quarterly performance reports.
Where Janney Montgomery Scott is located
Janney Montgomery Scott has over 100 offices throughout the U.S. In its Form ADV, it lists locations in the following 12 states and the District of Columbia:
- District of Columbia
- New Jersey
- New York
- North Carolina
- Rhode Island
Is Janney Montgomery Scott right for you?
If you are looking for general investment advisory services, Janney Montgomery Scott offers plenty of options to choose from. The firm could be particularly attractive for those with smaller portfolios because you can access their services for as little as $5,000 whereas other investment advisors can require much larger investment minimums.
On the other hand, if you are looking for specialized advice, like an advisor who focuses on divorce or advice for doctors, Janney Montgomery Scott does not offer these specialties as it is more of a general investment firm. The firm’s maximum fee is also on the high side. While its rates are negotiable, bigger investors may qualify for a better rate at other advisors with clearer rate breakpoints.
Before signing up for any advisor, make sure you’ve properly researched what’s out there. For more local options to consider, check out MagnifyMoney’s financial advisor search tool.
The “Find a Financial Advisor” links contained in this article will direct you to webpages devoted to MagnifyMoney Advisor (“MMA”). After completing a brief questionnaire, you will be matched with certain financial advisers who participate in MMA’s referral program, which may or may not include the investment advisers discussed.