Author Topic: JPMorgan vs Morgan Stanley (helping my parents to make a desision)  (Read 4815 times)

FiguringItOut

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Hi.

I’m not sure if what I will ask will make sense, but I’m trying to help my parents here.  My parents are now retired as of last year. 


My parents have an investment portfolio with JP Morgan and they have a dedicated investment manager there that they’ve been using for many years now.  I have no information on the type of portfolio or the size of their investments, but I am assuming that it is fairly substantial, although not exuberant. 

Last night they called me saying that their investment manager called them up and told them that he moved from JPMorgan to Morgan Stanley and he wants for my parents to move their portfolio with him to Morgan Stanley.  He told my parents that the reason for this move is because JPMorgan is changing their internal policy as of November 2014 to only invest in funds and/or investments that are managed by JPMorgan, thus keeping a larger portion of profits from fees and such for themselves.  Has anybody heard of this?  I tried googling something about this, but not sure what I am looking for.

Also, this investment manager told my parents that their portfolio would remain the same, just be under Morgan Stanley umbrella as oppose to JPMorgan.

My parents called JPMorgan on Friday and spoke with their “new” investment manager who was assigned to their account.  They are not impressed by a long shot.  The new guy only has 5 years of experience and is making it sound like he’s an expert.  The old guy has been in the business for over 20 years.  Also, over the phone the new guy wasn’t able to answer any questions claiming that he was just assigned and hasn’t had a chance to review their account.

Today they are meeting with the new guy at JPM to get more info and to get a better feel for what’s going on.  On Thursday they are meeting with the old guy at Morgan Stanley to hear him out.

My mom wasn’t able to tell me what funds they are currently invested in, other than that it is a fairly conservative investment approach (due to them being in retirement already).  I asked her to get me a list of the investments so that at least I can look them up and get an idea of what their portfolio consist of.

If anything that I wrote above makes any sense, what do you suggest my parents needs to find out to be able to make this decision?

Off the top of my head, I’d want to know

If they stay with JPM: what investments/funds would be excluded by the new JPM strategy and how it would directly affect my parents portfolio?  If they will need to liquidate some investments due to this, how will it affect their long term/short term capital gains?  If they are basically forced to do this, how will any transaction fees be handled?  What would be their alternative options for investments?

If they move the Morgan Stanley: how will the transfer take place physically and logistically?  How can they keep their existing portfolio under the new umbrella?  How does this transfer actually happen (sell under JPM, buy under Morgan Stanley) or something else?  Also, how the LT/ST capital gains and various fees be affected?

Do these questions make sense?  What else do they need to find out?

Thank you all in advance.

MayDay

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Re: JPMorgan vs Morgan Stanley (helping my parents to make a desision)
« Reply #1 on: October 21, 2014, 11:37:28 AM »
The most obvious question is what are the fees. 


deragun

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Re: JPMorgan vs Morgan Stanley (helping my parents to make a desision)
« Reply #2 on: October 21, 2014, 11:41:12 AM »
I would say most of those questions make sense.  The approach I would take is to try to get the same set of questions collected before talking to either side further.  That will make a comparison of the answers much easier, and help build confidence in a final decision.

Something like:
What funds would the portfolio be put in?
What overall fees would be charged initially to get the portfolio setup?
What ongoing fees would be charged?
How frequently would changes be made to the distribution of funds?

If you compare the answers on those between the two it should help you compare apples to apples.  Plus if you can compare to what they had before their manager moved you can see if it's better/worse than how things stood before any change.

Also, your questions on logistics of moving the portfolio are good to follow up on before deciding.

To me this could be a very nice trigger to getting more aware of what's being done with the nest egg, and could even lead to more direct management of it.




Thegoblinchief

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Re: JPMorgan vs Morgan Stanley (helping my parents to make a desision)
« Reply #3 on: October 21, 2014, 12:47:03 PM »
False binary. Why are these the only choices?

Offer to help then move to Vanguard or Fidelity and gain quite a bit more per year thanks to fees 1/5 or less.

retired?

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Re: JPMorgan vs Morgan Stanley (helping my parents to make a desision)
« Reply #4 on: October 21, 2014, 12:56:29 PM »
Is the adviser really providing a service?  My wife had some stuff that was in a Morgan Stanley account when we got married.  I rolled it into a Vanguard.  Whenever there is an extra middle man, someone is getting paid.

Some people like the hand-holding, but you have to ask what you are really getting. 

If you are just the tiniest bit savvy, you can probably set them up with an "equivalent" portfolio in Vanguard funds to get them started.  You may not want that responsibility. 

From my limited experience, these guys are less savvy than the actual fund managers(who on average match the market....by definition) and are really salespeople.  They don't know investments, they are fed little blurbs which they feed to their customers.

And, if the investments are individual stocks, those can be put into a low cost account.

FiguringItOut

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Re: JPMorgan vs Morgan Stanley (helping my parents to make a desision)
« Reply #5 on: October 21, 2014, 12:59:14 PM »
False binary. Why are these the only choices?

Offer to help then move to Vanguard or Fidelity and gain quite a bit more per year thanks to fees 1/5 or less.

I just found out (about 10 min ago talked to mom) that this portfolio used to be her 403b portfolio with Fidelity which she transferred to JPMorgan less than a year ago.  I did not get a clear answer from her as why she transferred it from Fidelity to JPM. 

I need to talk to her a lot more about this to get a better idea of what her strategy is right now and what her desired strategy is going forward.

I should add, that I have no experience in vesting and don't have any investments myself (long story for another time) so I can't help her without substantial research.

I did find out from her that she is NOT currently drawing funds from this portfolio and there are no plans for the near future to do so.  My parents are living off of my mom's pension right now.

I got a list of funds from her portfolio and will look them up later tonight when I have some time to get an idea of what they are invested in and how much does it cost them.  I have a feeling that they are not doing well right now between low growth of the portfolio and all of the associated fees involved. 

deragun, thank you for the questions.  Based on what my mom was told at JPM today a lot more info needs to be researched.  JPM is now saying that what ever the old investment manager who moved to Morgan Stanley told them about JPM excluding non JPM funds is not true. 

I will try to help my folks out as much as I can with this. 

FiguringItOut

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Re: JPMorgan vs Morgan Stanley (helping my parents to make a desision)
« Reply #6 on: October 21, 2014, 01:02:31 PM »
Is the adviser really providing a service? 

At this point, this is not clear

My wife had some stuff that was in a Morgan Stanley account when we got married.  I rolled it into a Vanguard.  Whenever there is an extra middle man, someone is getting paid.

Some people like the hand-holding, but you have to ask what you are really getting. 

If you are just the tiniest bit savvy, you can probably set them up with an "equivalent" portfolio in Vanguard funds to get them started.  You may not want that responsibility. 

Yep, I don't want to be involved past getting them info so that they can make a desision.

From my limited experience, these guys are less savvy than the actual fund managers(who on average match the market....by definition) and are really salespeople.  They don't know investments, they are fed little blurbs which they feed to their customers.

This is what it looks like based on the conversataion they had today at JPM.

And, if the investments are individual stocks, those can be put into a low cost account.

No individual stocks.  Some mutual funds and some Goldman and JPM home grown funds.

retired?

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Re: JPMorgan vs Morgan Stanley (helping my parents to make a desision)
« Reply #7 on: October 21, 2014, 01:03:30 PM »
Follow-up....as noted, I think the tax implications are your biggest concern.  Are these taxable accounts or IRAs?  What are the ST and LT gains.

Seems you know the right questions to ask.  But, expect answers to NOT be unbiased.  May be best to talk to an accountant if the sums are large enough.

FiguringItOut

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Re: JPMorgan vs Morgan Stanley (helping my parents to make a desision)
« Reply #8 on: October 21, 2014, 01:07:01 PM »
Follow-up....as noted, I think the tax implications are your biggest concern.  Are these taxable accounts or IRAs?  What are the ST and LT gains.

Seems you know the right questions to ask.  But, expect answers to NOT be unbiased.  May be best to talk to an accountant if the sums are large enough.

Posted this above: "I just found out (about 10 min ago talked to mom) that this portfolio used to be her 403b portfolio with Fidelity which she transferred to JPMorgan less than a year ago.  I did not get a clear answer from her as why she transferred it from Fidelity to JPM" 

The good news I guess is that mom is NOT currently drawing funds from this portfolio and there are no plans for the near future to do so.

I need more info and more research here.

retired?

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Re: JPMorgan vs Morgan Stanley (helping my parents to make a desision)
« Reply #9 on: October 21, 2014, 01:08:18 PM »
something sounds fishy:

He told my parents that the reason for this move is because JPMorgan is changing their internal policy as of November 2014 to only invest in funds and/or investments that are managed by JPMorgan, thus keeping a larger portion of profits from fees and such for themselves.

Presumably this is only for newly invested $$.  Otherwise, JPM needs a plan for all their customers.  I am guessing that is the case and they can keep their current non-JPM managed funds.  Who knows how fees might change.

FiguringItOut

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Re: JPMorgan vs Morgan Stanley (helping my parents to make a desision)
« Reply #10 on: October 21, 2014, 01:12:01 PM »
something sounds fishy:

He told my parents that the reason for this move is because JPMorgan is changing their internal policy as of November 2014 to only invest in funds and/or investments that are managed by JPMorgan, thus keeping a larger portion of profits from fees and such for themselves.

Presumably this is only for newly invested $$.  Otherwise, JPM needs a plan for all their customers.  I am guessing that is the case and they can keep their current non-JPM managed funds.  Who knows how fees might change.

I asnwered above "Based on what my mom was told at JPM today a lot more info needs to be researched.  JPM is now saying that what ever the old investment manager who moved to Morgan Stanley told them about JPM excluding non JPM funds is not true.  " 

I'll will be trying to help my folks as much as I can with the reaserch so that they can me a decision for themselves on what to go going forward, whether it is at JPM, MS, or somewhere else.

retired?

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Re: JPMorgan vs Morgan Stanley (helping my parents to make a desision)
« Reply #11 on: October 22, 2014, 08:30:46 PM »
Def need some clarity from JPM since that is where the $$ currently resides.  The guy who has left has reasons to say your parents ought to move their $$. 

The difference b/n listening to the two parties is that JPM has a responsibility to tell the truth about their own services.  Old guy has a responsibility to tell the truth about MS, but not about JPM.

chesebert

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Re: JPMorgan vs Morgan Stanley (helping my parents to make a desision)
« Reply #12 on: October 23, 2014, 06:52:40 AM »
My experience with JPM is they have great research, resources and analysis (the live presentation by their head of investment has been spot-on in many respects); but for the life of me I don't understand when it comes to actual execution, their funds don't do very well. I have a very small stake with JPM, just so I can get the reports and be on the invite list for the presentation.

I think MS is probably no different. Unless there is some specific reason for staying with either, I would move somewhere else.

YoungInvestor

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Re: JPMorgan vs Morgan Stanley (helping my parents to make a desision)
« Reply #13 on: October 23, 2014, 08:21:38 AM »
The older guy probably moved because he will get paid more, and I doubt that it will have much to do with anything else than his paycheck. The new situation may or may not be better for his clients.

If the products are equivalent and they feel more comfortable with the older guy, then they might go for it.

I'd personally go with someone younger, given the choice, but if they're comfortable in their investing habits, then that's good. I think it is unfair to expect the new guy to immediately be able to answer questions about all of his clients, however.If anything, give him props for not making up an answer without a solid knowledge of the file.

If your parents' portfolio is fairly large, it may be time to ask for better conditions at the new bank. And at the older one. Ask for lower fees because of the move at the new bank, and ask for lower fees because the guy has less experience at the other.

I wouldn't get anywhere near suggesting an investment pattern to my parents, there's only trouble in it for you if anything goes wrong (market crash, etc.).

Mister Fancypants

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Re: JPMorgan vs Morgan Stanley (helping my parents to make a desision)
« Reply #14 on: October 23, 2014, 11:47:18 AM »
First I will let you know I work on Wall Street so take my advice with whatever size grain of salt you would like. I'm a software developer and have never worked at either of those firms.

When an account is transferred from one firm to another the receiving firm will use a process refered to as ACAT which is similar to ACH between banks but for securities, it is slightly more complicated but it allows your assets to be transferred in kind without being sold and the transaction history ca sometime transfer along with the assets depending on the firms involved. The process is either fully electronic or paper based depending on the sophistication of the fit a technologies and their relationships. MS and JPM would be fully electronic and most likely transaction history would transfer.

Now for taxable accounts that is very relevant as it allows you to switch brokerages without incurring taxable events, in your parents case the account is the proceeds of a 403(b) so there would be no taxes but it just eliminates sales fees etc.

Now Finra calls these advisors Registered Reps, they are employees of the firms they represent, your parents are actually clients of the firm not the advisor, it is illegal and unethical for an RR to take their client list to a new firm when they leave. That being said, most people follow their advisors and have no loyalty to their firms, this is a very gray area and subject to lots of lawsuits. Many times the advisors bring the clients to the firms and it is hard to prove they were solicited to leave etc...

Now whether JPM is actually instituting the policy you indicated or not for a certain group of clients or advisors is also completely something you will never know, but you parents might have called them on it and they waived the policy etc...

Now to your actual question, your parents advisor gets paid a fee to advise/sell product, their interests only partially align with the investors. I have no idea why your parents chose to leave fidelity in the first place but they offer free advice in their offices which rangers from lack luster to above average and fee based advisory services that are decent. Every here loves vanguard for the cheap fees, I think there customer service lags behind fidelity and you can get cheap funds with some advice there.

Now Vanguard and Fidelity are great for the DIY investors but some people just prefer an advisor even though it cost them. Depending on the portfolio size really drives what you do. My guess is the portfolio is not 8 figures or JPM would have looked at and made more an effort to get someone more experienced in touch ASAP. So you are in the 6 or 7 figure range, if it's 6 figure go the DIY approach with an advisor at Fid or Van... You will be fine, if you are in the mid to high 7 figure range I would recommend Neuberger Berman (disclosure, I used to work their when it was a Lehman subsidiary, and still have many friend there), all they is asset management for high net worth clients. I used to run test reports for my favorite celebrity clients when deploying new functionality, when you had to pick an account why not a rock star.

-Mister FancyPants

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Re: JPMorgan vs Morgan Stanley (helping my parents to make a desision)
« Reply #15 on: October 23, 2014, 11:55:10 AM »
Lots of typos in my last post... Did from my iPhone in a cab... Will edit later :)