The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: m46blanchi on August 14, 2019, 05:36:42 PM
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Hello Everyone,
This might be a silly question! If so, sorry. I am 52 and my husband is 71. He has several hundred K in a traditional IRA with Edward Jones. I wanted to know if it makes any sense at all, at this late date for us to transfer the full balance to a VANGUARD US Total Index Fund (VTI)? I will also be transferring my own (much smaller) IRA to Vanguard.
Any advice would be appreciated. Thanks, Michelle.
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Yes. Always.
EJ charges OUTRAGEOUS fees without offering actual value for that money. And they take it even through times where they lose you money in the market.
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Yes. Always.
EJ charges OUTRAGEOUS fees without offering actual value for that money. And they take it even through times where they lose you money in the market.
+1 on the transfer.
m46blanchi, whether you want to put it all into VTI depends on what you want for your overall Asset allocation (https://www.bogleheads.org/wiki/Asset_allocation).
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Transfer to Vanguard sounds good.
Not sure about a 71 year old being 100% in index funds.
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Transfer to Vanguard sounds good.
Not sure about a 71 year old being 100% in index funds.
Husband is 71 but OP is 52. No information about how they share finances, income/jobs, other assets what their goals are etc. but maintaining a very high stock allocation isn't a bad thing so long as one can stomach the volatility - even deep into retirement. I'm guessing your objection was the proportion of equities, not index funds themselves (I'd encourage even people who want a more conservative 60/40 split to do so holding a combination of index funds)
Asset allocation is something each investor needs to determine based on their own goals and preferences.
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yes, transfer, but you will pay some non-trivial amount ($25?) to convert each of those terrible Edward Jones funds to VTI. I had a terrible EJ advisor who had me in something ridiculous like 30 funds...which amounts to a lot of money to sell and re-buy Vanguard funds. It was worth it.
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Here was my reply to an older EJ to VG topic. I think the only thing that has changed is that Vanguard's costs are even lower.
Right out of college I briefly worked at EJ before I realized I didn't want to invest my own money in the products we recommended to clients.
When I worked at EJ I can remember 1 story where someone told me how they really helped a client with their advice, and that story ended with them selling the client an annuity... I have far more memories of advisors bragging about their commissions, bragging about their consumerism(BMWs, gambling, mcmansions, boats, company paid vacations) and it was standard practice at regional meetings for the manager to put the top 10 broker's monthly commissions up on a giant projector for everyone to see. It was all about sales, sales, sales. What really irked me beyond all of that was how clueless most of them were. I was the only person in my hiring class with a finance degree and most of my peers were hired because of their sales experience. Yes, there was a used car salesmen... To pass the Series 7 Investments Licensing exam you needed a 70%, and when I got a 92% they told me I studied too hard. I could have spent the extra time prospecting for clients if they had known I was that over prepared. I WISH I was kidding...
The mutual fund training had 0% to do with how to evaluate mutual funds and construct portfolios, and 100% with how to sell mutual funds. When asked how to evaluate funds they said, "see what your mentor (veteran advisor) is selling and sell that."
Months after we had been giving advice to clients, we had a training where an instructor explained how a backdoor Roth worked, and it was quickly apparent most of my peers didn't understand the basic rules for contributing to Traditional and Roth IRAs. I'm afraid of what they had been recommending to clients.
We went with EJ several years ago when they essentially charged nominal rates ($40 a year).
That's the annual fee just to have an account. The commissions you were paying that are built into each mutual fund and stock purchase were likely about 5%. That's not including the 0.6 to 2.5% annual expenses built into the mutual funds.
For comparison, a low cost Vanguard index fund will run you 0.05% per year. The fees you pay on your first day with EJ are often the equivalent of 100 years with Vanguard. (5% / 0.05 = 100)
Now since I worked there they have added accounts that have 1-1.5% management fees instead of the 5% up front commission, but that's still really expensive.
Summary: RUN from EJ!!!
And if you really want advice, Vanguard is still a safer bet. If you have over 500k you can meet with a CFP for free, and they are fiduciaries who aren't paid commissions. Whether you have over 500k or not, they will also manage your account if you need that much help, and it will be a tiny fraction of what EJ was charging.
Link to topic in case you want to read all of it: https://forum.mrmoneymustache.com/investor-alley/parents-have-accounts-with-edward-jones-switch-them-to-vanguard/
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well if you cut your fees by like 1 percent of assets or more, that tells you how much you will save every year with Vanguard. whatever fees to sell the EJ funds are worth in.