Author Topic: Considering Moving IRAs from LPL To Vangaurd  (Read 199 times)

BanjoAndy

  • 5 O'Clock Shadow
  • *
  • Posts: 1
Considering Moving IRAs from LPL To Vangaurd
« on: January 10, 2019, 10:46:59 AM »
Howdy folks,
My wife and I currently have IRAs invested with LPL.  Over the past few years Iíve learned a lot about and am looking at improving how our money is invested and I think that one way to do this is to move my money out of the LPL accounts and into similar vanguard accounts as the fees are substantially lower (LPL has a 1.35% annual fee on our IRAs).  Before taking action however I want to 1) ensure Iím doing the correct thing and 2) convince my wife that this is a better course of action. 

One thing Iíve done is create an Excel sheet showing how the fees impact growth at 1, 5, 10, 20, 30, 40 and 50 years.  Itís shocking looking out at 50 years how the two lines diverge from each other Ė which makes a pretty strong case.  At this point my wife is almost convinced, but thinks I should show our financial planner the data and discuss with him.  So my questions are:

- What else should I be thinking about / What am I missing?

- If I do discuss this with my financial planner what types of arguments should I expect from him?  I donít think you can argue with the math, but wondering what type of case heís going to make for sticking with LPL and how I should counter.

Thanks in advance for your input and let me know if you need any more info.

nereo

  • Walrus Stache
  • *******
  • Posts: 9141
  • Location: la belle province
    • Here's how you can support science today:
Re: Considering Moving IRAs from LPL To Vangaurd
« Reply #1 on: January 10, 2019, 01:13:09 PM »
I'm not familiar with what "LPL" is, but holy crap 1.35% is a huge annual fee. 
Absolutely GTFO and move those IRAs into lower cost funds at another brokerage*. 

What will your financial planner say? Well first off you don't need to talk to him at all if you don't want to; you can initiate the asset transfer with Vanguard and they'll handle everything.

If you do talk to the financial planner expect that they are going to fight for your business (1.35% is a ton of money for little work ont heir part over several decades, especially as your accounts grow into 6-digit nest eggs).  Often they'll try to throw financial terms at you like 'loss aversion strategy' and porfolio optimization and tax-loss harvesting (the latter of which doesn't amtter for IRAs at all, and can be done through Vanguard).  Remember, these people want your business and they want you to believe they would be better at managing your money than you.  Rarely does it work out that way (managed funds almost always trail index funds over 5+ year periods). The really disingenuous money managers will make you feel guilty, or like you are making a big mistake. The honest ones will shake your hand and say 'good luck, and remember i'm here if you decide you want more client-based support'.

*Vanguard is very good and that is what I use, but they are not the only game in town.  Fidelity has recently introduced index funds with marginally lower expense ratios, and Schwab is also a fine choice.

« Last Edit: January 10, 2019, 03:29:28 PM by nereo »

Indexer

  • Handlebar Stache
  • *****
  • Posts: 1249
Re: Considering Moving IRAs from LPL To Vangaurd
« Reply #2 on: January 10, 2019, 03:25:41 PM »
I'm not familiar with what "LPL" is, but holy crap 1.35% is a huge annual fee. 
Absolutely GTFO and move those IRAs into lower cost funds at another brokerage*. 


LPL is like Edward Jones or Raymond James. Very high cost, advisors tend to work very independently, but LPL is known for having even less oversight of their advisors than EJ or RJ.



My advice. Don't ask your financial planner. They will argue you should stay with them. If you really want a second opinion ask a Vanguard Financial Planner.

1. If you have over $500k the consultation is free. They might even do it on smaller accounts if it's the deciding factor for moving your accounts. Doesn't hurt to ask.

2. They can help you switch to a portfolio of low cost index funds. You are paying 1.35%, and my guess is that isn't even counting the expenses hidden within the investments. I wouldn't be surprised(based on the fact that it's LPL) if that was another 1.35%.

3. They are fiduciaries, so they have to act in your best interest. If staying at LPL was in your best interest (it's NOT!) they would have to tell you that.

4. If you don't need an advisor, the consultation is free. If you actually need ongoing help the cost is 0.3%.

nereo

  • Walrus Stache
  • *******
  • Posts: 9141
  • Location: la belle province
    • Here's how you can support science today:
Re: Considering Moving IRAs from LPL To Vangaurd
« Reply #3 on: January 10, 2019, 03:36:27 PM »

LPL is like Edward Jones or Raymond James. Very high cost, advisors tend to work very independently, but LPL is known for having even less oversight of their advisors than EJ or RJ.

Hard to imagine there's a firm that's worse than Edward Jones out there to bilk individual investors our of their money.

In case my suggestion was too vague above, I concur with Indexer; don't ask your financial planner, they'll just give you a sales pitch about why you should stay.  Contact Vanguard/Fidelity and ask them to assist you with an asset transfer.

Also - done correctly this will be a non-taxable event.  All brokerages have experience with this, but just make sure that it's done as a direct transfer from the old account into a new IRA account.

jacoavluha

  • Bristles
  • ***
  • Posts: 270
Re: Considering Moving IRAs from LPL To Vangaurd
« Reply #4 on: January 10, 2019, 06:20:41 PM »
Donít talk to your financial planner. Just call Vanguard and tell them you want to move your money to them. Your spouse will thank you later.