Moving 500k+... need help!

[lampstache]

My grandma is mid-70's and has what I'm guessing to be at least 500k in investments held in a variety of Stifel Nickolaus and Wells Fargo accounts. While I don't know the exact number, my grandfather and her were very financially savvy and she received an inheritance of a few hundred thousand dollars when her Great Aunt passed away about 5 years ago.

I was speaking with her a few weeks ago and asked if she had any idea what her expense ratio's were on the mutual funds that she owned. She had no clue, and quite honestly has no idea what she has ever been charged for holding her money at either of these institutions. Today during our Mother's Day lunch we pulled up the expense ratio data for one of her Franklin Templeton mutual funds held through Stifiel Nickolaus and it was 1.12. (I gagged) I then pulled up a handy expense ratio calculator and compared the 1.12 ratio to a vanguard mutual fund of .18 and showed her the fee difference over the course of 10 years. She was amazed at the difference and started to pique her curiosity at how much she's been charged all these years...

My/her questions for the MMM forum are:
- Would either Stifel or Wells Fargo be able to pull a report showing what she's been charged over the years? Whether their trading fees or expense ratio fees?
- She's comfortable with Stifel because she has one 'adviser' she's gotten to know over the years and likes the personal touch of having someone to call. Does Vanguard provide any type of personal touch and/or how would she go about moving this money with minimal fees charged to her?
- How can she go about setting up her accounts for her to withdraw from them over time like she has it set up now if she were to move her money to Vanguard? Would they assist with this?

I apologize for being somewhat scattered with my questions. There's probably others that I'm forgetting at the moment too. If you've had a similar experience with this type of situation your feedback and own experience would be great too. Thanks!

[secondcor521]

Taking your questions in order:

1.  Regarding a report of fees - they probably can't.  Even if they could, they wouldn't want to.  You could, of course, roughly estimate it by taking her approximate balance each year and multiply it by the average expense ratio.  If she kept her trade confirmation slips those would show the trading fees that she was assessed, but again you could estimate those by number of transactions times average transaction cost (brokerage fee plus SEC fees).
2.  Vanguard will assign you a specific account representative once you have a certain amount with them - I would think that $500K would qualify.  You can look on Vanguard's web site and find out.
3.  Regarding moving the money - Call Vanguard and tell them that you want their help in moving the money to them, and they will gladly help your grandmother do so.
4.  Yes, Vanguard can set up automatic withdrawal plans for your grandmother.  All she has to do is tell them how much and how often, and they'll automatically withdraw the money from her Vanguard accounts and transfer it to her checking or savings account.  Again, you can call them or check their website; they're easy to set up.

[lampstache]

Taking your questions in order:

1.  Regarding a report of fees - they probably can't.  Even if they could, they wouldn't want to.  You could, of course, roughly estimate it by taking her approximate balance each year and multiply it by the average expense ratio.  If she kept her trade confirmation slips those would show the trading fees that she was assessed, but again you could estimate those by number of transactions times average transaction cost (brokerage fee plus SEC fees).
2.  Vanguard will assign you a specific account representative once you have a certain amount with them - I would think that $500K would qualify.  You can look on Vanguard's web site and find out.
3.  Regarding moving the money - Call Vanguard and tell them that you want their help in moving the money to them, and they will gladly help your grandmother do so.
4.  Yes, Vanguard can set up automatic withdrawal plans for your grandmother.  All she has to do is tell them how much and how often, and they'll automatically withdraw the money from her Vanguard accounts and transfer it to her checking or savings account.  Again, you can call them or check their website; they're easy to set up.

This is great. I appreciate it. The biggest thing she's worried about is "how would I do it?". She very conditioned to just having someone handle it and receiving her monthly statements with not asking any questions. Seems to be a bit simpler than maybe I'm making it out to be in my head.

As a follow up, would she have to worry about any type of tax issues if she's selling her holdings and then moving them to Vanguard?

[secondcor521]

If they are in a taxable account and she sold them, then yes, she would have to pay capital gains or losses.  (I'm assuming she lives in the US.)

However, there is an alternative.  Vanguard can almost certainly *move* the investments for her without *selling* them.  This is called an "in kind" transfer and would result in no taxes due.

[Wile E. Coyote]

If they are in a taxable account and she sold them, then yes, she would have to pay capital gains or losses.  (I'm assuming she lives in the US.)

However, there is an alternative.  Vanguard can almost certainly *move* the investments for her without *selling* them.  This is called an "in kind" transfer and would result in no taxes due.

But if vanguard does that, the money is still in the same funds with the high expense ratios, which he wants to get her away from.

OP may want to consider whether she qualifies for a zero or low rate on capital gains, assuming she's not making too much and perhaps staggering over a few years to keep the tax hit down. 

[csprof]

2.  Vanguard will assign you a specific account representative once you have a certain amount with them - I would think that $500K would qualify.  You can look on Vanguard's web site and find out.

At 500k, you can call and talk to humans for advice, but you don't get the same human each time.  They charge a bit extra for that.

(500k is "Vanguard Voyager Select" - https://investor.vanguard.com/what-we-offer/personal-services/voyager-and-voyager-select-services )

At $1m, I believe you can have an ongoing CFP relationship for free, as part of "Flagship" -
https://investor.vanguard.com/what-we-offer/personal-services/flagship-and-flagship-select-services

(I've never tried talking to a human at Vanguard for advice, so I have no knowledge beyond this.)

[thedayisbrave]

Might be better to figure out exact amounts.. you say "at least 500K" but all that means is >500K.

Flagship customers at Vanguard get a dedicated rep, and yes they answer the phone personally - it's great.  However another option if she is not at Flagship status yet would be to do Vanguard personal advisory services.  They charge 0.30% but even with the low cost fund fees on top of that, your grandmother would come out ahead -- just a thought. 

[lampstache]

Really appreciate all the replies. Gives me more info to pass on to her that there is a plan and professionals that could help her appropriately. I understand her hesitation on sharing her financial details, but want to help her keep more of her money! She's happy and healthy and travels often and this will enable her to continue doing the things she loves for as long she is able.

[mozar]

As long has she is not paying more in taxes than she needs to, you could just leave it alone. Change is hard at that age.

[Mother Fussbudget]

Have you discussed beneficiaries, and transfer of your grandmother's investments at end-of-life?
I know it's a sensitive subject, but a little planning can insure more of the wealth is inherited, rather than taxed away.

It might make sense to identify future beneficiaries NOW, and to set up separate IRA accounts for the benefit of these beneficiaries. 

Normally, a child (or grand child) can NOT assume ownership of or roll over a parent's (grand-parent's) inherited IRA.  However, the parent can create an IRA in the child's name for the benefit of the child.  By doing so, the child can perform a trustee-to-trustee transfer from this IRA to her IRA after the IRA holder's death.  By doing so, the child does not have to begin distributing the inherited assets any sooner than normally required of IRA owners. 

If you don't, it's more complicated (and in my mind, something to avoid).  Here's how it works:  If you inherit an IRA from a parent and can't transfer it to your IRA, you might need to distribute the account by the end of a five-year period.  The five-year rule applies if any of the beneficiaries is not an individual (ex; a company, charitable organization, etc).  If all beneficiaries are individuals, you can stretch out required payments based on the life expectancy of the oldest beneficiary.  If your parent designates separate accounts within an IRA, you can stretch out distributions of your portion of the inheritance over your life expectancy, not that of the oldest beneficiary.  However, if you miss the deadline for the first distribution, which is December 31 of the year following your parent’s death, the five-year rule then applies.