Author Topic: Getting out of Edward Jones  (Read 23779 times)

megan1104

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Getting out of Edward Jones
« on: August 07, 2016, 01:37:49 PM »

As I've learned in my time here in the MMM, I need to get my money out of Edward Jones ASAP. Currently, we have about $100k in traditional IRAs, which was left to us by my wife's mother when she passed away, $25k in Roth IRAs, $25k in 529s (American funds which have a very high expense ratio), and $50k in a mix of mutual funds, stock, and a unit trust. We've been slowly moving money from the IRAs into the 529s.

We are looking to get everything out of EJ and into low-fee products like those at Vanguard. I know I can simply roll over the 529s, but what about the other funds? Obviously, we want to move our money with as little cost possible. I now know that I can't always trust our EJ advisor to give unbiased advice or information. Does anyone have any specific resources or words of wisdom so we can get the hell out of there with minimal pain and suffering?

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Re: Getting out of Edward Jones
« Reply #1 on: August 07, 2016, 01:50:15 PM »
Was in a similar circumstance with an inherited Ira

Just start the process of moving your Ira at vanguard ASAP.  The sooner you get rid of their stupid fees the sooner you can get back in the right track.  The process is straightforward, see vanguards web site. 

forummm

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Re: Getting out of Edward Jones
« Reply #2 on: August 07, 2016, 02:44:48 PM »
Just call Vanguard and they will roll it over for you and get you into good low-fee index funds.

megan1104

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Re: Getting out of Edward Jones
« Reply #3 on: August 07, 2016, 02:50:28 PM »
Including the mutual funds, stocks, and unit trust? I've read conflicting things about needing to liquidate these things in order to move them to Vanguard, incurring capital gains, etc.

Thanks!
Megan

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Re: Getting out of Edward Jones
« Reply #4 on: August 07, 2016, 02:59:28 PM »
Good riddance!

Ask Vanguard about the specifics of your transactions. If there are tax implications, then the agent on the phone might advise you to consult with a tax attorney.

seattlecyclone

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Re: Getting out of Edward Jones
« Reply #5 on: August 07, 2016, 03:06:55 PM »
Including the mutual funds, stocks, and unit trust? I've read conflicting things about needing to liquidate these things in order to move them to Vanguard, incurring capital gains, etc.

You'll need to liquidate your current investments in order to buy Vanguard funds. You may or may not be able to do an "in kind transfer," in which your existing investments would be moved from an Edward Jones account to a Vanguard account of the same type (IRA to IRA, 529 to 529, etc.). The only reason to liquidate one place or the other would be because you would want to sell at the place with the lowest trading fees. For these investments, that might or might not be Vanguard. You might or might not even be able to sell all of these things at Vanguard, if your Edward Jones advisor salesman convinced you to buy investments that aren't traded on the public markets.

Don't worry at all about capital gains within your IRA or 529s. Transactions within those accounts aren't taxable; it's only when you remove money from them that taxation might apply. For the taxable accounts, do you want to hold these investments in five years? Ten? If not, you'll be selling and realizing gains eventually. Might as well bite the bullet and do it now so that your ongoing fees are lower starting this year.

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Re: Getting out of Edward Jones
« Reply #6 on: August 07, 2016, 03:23:04 PM »
In your shoes, I would look at all of the funds to see how well they have performed, what the expenses are, and whether they are proprietary to EJ.  Anything in a taxable account is generally best transferred "in kind" if selling the fund or stock would create a large capital gains tax.  Weigh the tax against any fee charged by EJ or the company you pick to go forward to sell.   You can control the capital gains tax after moving by selling things over time, depending on how bad they are.  Sell the worst stuff first.  The unit trust will likely have to be sold and the proceeds transferred.

Anything in a tax deferred account or a Roth can be sold before or after moving, whichever is less expensive. 

I do not understand how you can move money from IRA's to 529 plans without incurring taxes or a penalty.  You could withdraw Roth contributions without tax or penalty to do this, but not money in a traditional IRA.

I find Vanguard's customer service to be weak.  I prefer Fidelity, which offers similar low cost products such as index funds.  Worth checking both out.

But, yeah, kick EJ to the curb ASAP.

megan1104

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Re: Getting out of Edward Jones
« Reply #7 on: August 07, 2016, 03:41:39 PM »
Thanks for all of the advice. I wasn't clear: we are moving $2k from the IRAs to the 529s every year. We *do* pay taxes on it but it's supposedly in the lowest tax bracket because it's in the kids' names. (This move was validated by my tax professional, not just the EJ guy).

I have another semi-related question. Does it make sense to liquidate the mutual funds, stocks, and unit trust currently with EJ and dump all of that $$ into the 529s once they are at Vanguard. Our goal is to pay for tuition plus room and board for our four kids (currently 9, 9, 4, and 2 years old) when the time comes. According to various college calculators, we could do this by contributing $600-$700/month for the next 19 years (which adds up to well over $130k). The same calculators say one lump sum payment of $60k or so would get the same result, which I assume comes from the magic of compound interest. The $50k we have in this "joint" account with EJ could get us most of the way there, then we could mainly just focus on our personal investments and retirement funds from here on out. (Full disclosure, we have over $315k in TIAA so we are not without some sort of start for retirement. This money is largely in the Vanguard Total Stock Market Index funds, which is one of the options within TIAA.)

megan1104

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Re: Getting out of Edward Jones
« Reply #8 on: August 07, 2016, 03:47:50 PM »
I should add our goal is to pay for our kids to attend the University of Washington or some other state school (we live in Seattle too, seattlecyclone). If they want to go to a more expensive college or university, they will need to be prepared to get a scholarship or take out loans. Hopefully by the time they are old enough, they'll be smart enough to know the debt isn't worth it!

seattlecyclone

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Re: Getting out of Edward Jones
« Reply #9 on: August 07, 2016, 04:20:37 PM »
Thanks for all of the advice. I wasn't clear: we are moving $2k from the IRAs to the 529s every year. We *do* pay taxes on it but it's supposedly in the lowest tax bracket because it's in the kids' names. (This move was validated by my tax professional, not just the EJ guy).

Hmm...this raises a tiny red flag for me. Was the IRA left to you, or to your kid? If it was left to you, then you need to declare the income on your own tax return, so it would not be tax-free. If it was left to the kid, then I agree that small transfers like this could be tax-free, but it could also complicate things come FAFSA time.

Typically, parents will transfer their own money to a 529 account that is owned by the parents with the child as the beneficiary. With this setup, you can claim the 529 as the parents' property when applying for financial aid, which means it contributes less to the expected contribution than if it belonged to the child. However if the money came from the child's IRA, it would probably also need to go into a 529 account that is owned by the child, in which case it would be assessed at a higher amount when it comes time to apply for financial aid.

Indexer

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Re: Getting out of Edward Jones
« Reply #10 on: August 07, 2016, 08:31:27 PM »
Megan:  The short answer to your new questions is call Vanguard. They have a team that will help transfer the accounts.

I can say the costs to buy/sell at EJ will probably be astronomical compared to Vanguard so you should probably try to move everything in kind(as it is). There are exceptions to this but they are rare.

Quote
Thanks for all of the advice. I wasn't clear: we are moving $2k from the IRAs to the 529s every year. We *do* pay taxes on it but it's supposedly in the lowest tax bracket because it's in the kids' names. (This move was validated by my tax professional, not just the EJ guy).

I'm with Seattle on this. This sounds really odd. If these are inherited IRAs are in the kids name I can kind of see it since you have to take RMDs regardless.

megan1104

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Re: Getting out of Edward Jones
« Reply #11 on: August 07, 2016, 09:19:13 PM »
These are inherited IRAs in the kids' names. Does that make things seem more on the up and up? To be honest, that annual $2k transfer from the IRA to the 529s was not even on my list of worries about EJ!

Another Reader

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Re: Getting out of Edward Jones
« Reply #12 on: August 07, 2016, 09:51:58 PM »
That makes perfect sense.  The kids will have small RMD's.  The amounts are not enough to generate much of a tax bill, if any.

primozaj

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Re: Getting out of Edward Jones
« Reply #13 on: August 10, 2016, 12:20:45 PM »
So I realize that fees are expensive at EJ (I'm currently there).  I'm in the Advisory Solutions account with a bunch of ETFs and I pay like 1.5% annually (I have the exact number at home) on the total under mgmt.  I'm really considering the move but the reason I went to EJ was that I wanted a physical person to talk to not a group (via the phone) like Vanguard.  EJ also rebalances as much as biweekly under the AS program via 90 days for EJ.  So I guess what I am trying to decide is do I want just a few mutual funds for basic market exposure for the lowest cost or do I want to be in more focused ETFs?  I also wonder if my 15+ ETFs really see more of a return than three of the Vanguard admiral funds would have over the same period?  Is everyone driving at Vanguard just for costs or are they actually seeing better returns than elsewhere?

Another Reader

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Re: Getting out of Edward Jones
« Reply #14 on: August 10, 2016, 01:00:47 PM »
Likely these people are churning your account as well as collecting the AUM fee.  Are these well-known ETF's or proprietary ETF's?

I prefer Fidelity to Vanguard because I get local, assigned customer service, and the choice of products is similar, if not better.  You might like them as well.  Whatever you do, get away from the parasites at EJ.  You are paying through the nose for whatever they do.

Rubic

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Re: Getting out of Edward Jones
« Reply #15 on: August 10, 2016, 01:08:49 PM »
So I realize that fees are expensive at EJ (I'm currently there).  I'm in the Advisory Solutions account with a bunch of ETFs and I pay like 1.5% annually (I have the exact number at home) on the total under mgmt.  I'm really considering the move but the reason I went to EJ was that I wanted a physical person to talk to not a group (via the phone) like Vanguard.

[Emphasis mine.]

Your are essentially paying extra for the privilege of having face time with an individual.  Is paying a portion of his/her salary is worth 1.5% of your assets each year?

GrumpyPenguin

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Re: Getting out of Edward Jones
« Reply #16 on: August 10, 2016, 01:31:05 PM »
So I realize that fees are expensive at EJ (I'm currently there).  I'm in the Advisory Solutions account with a bunch of ETFs and I pay like 1.5% annually (I have the exact number at home) on the total under mgmt.  I'm really considering the move but the reason I went to EJ was that I wanted a physical person to talk to not a group (via the phone) like Vanguard.

[Emphasis mine.]

Your are essentially paying extra for the privilege of having face time with an individual.  Is paying a portion of his/her salary is worth 1.5% of your assets each year?

Yeah, 1.5% is a really expensive for this... With a $1 million portfolio, paying $15,000 a year for this is insane to me. I have Fidelity like the other person mentioned and I think I have the ability to talk to an actual person at the Fidelity store/office place near by, I've just never had the desire. I'm in 0.05% ER ETFs and pay nothing on top of that.

primozaj

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Re: Getting out of Edward Jones
« Reply #17 on: August 10, 2016, 02:06:17 PM »

Your are essentially paying extra for the privilege of having face time with an individual.  Is paying a portion of his/her salary is worth 1.5% of your assets each year?

No, it is not... good point... and I think a portion of the 1.5% is their actual salary.

To respond to others...
They aren't proprietary funds... iShares ETFs primarily
Yes 1.5% is high but they do lower the percentages after some dollar value (something like first $100k is 1.5%, next $100k is 1%)... but yeah... its still not justified

I think I'll finish the account process (only opened an account for my Roth, still need to do so for my inherited tIRA) and get the funds moved over... Vanguard said they could sell the funds for $7 each which is a drop in the bucket compared to what EJ charges... its something ridiculous like $50...
 

Another Reader

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Re: Getting out of Edward Jones
« Reply #18 on: August 10, 2016, 04:24:17 PM »
Why finish the account process?  EJ will charge you to leave.  Just transfer everything directly over to the new company instead.  Nothing wrong with the ETF's.  Just get them transferred over "in kind." Then decide if those ETF's align with your investment plan. 

If you want more personal service, look at Fidelity.  I much prefer their customer service.  Check out what "Frankies Girl" has to say about them as well.  Fidelity offers very low cost index funds and no-commission ETF's. 

Indexer

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Re: Getting out of Edward Jones
« Reply #19 on: August 11, 2016, 06:33:35 PM »
So I realize that fees are expensive at EJ (I'm currently there).  I'm in the Advisory Solutions account with a bunch of ETFs and I pay like 1.5% annually (I have the exact number at home) on the total under mgmt.  I'm really considering the move but the reason I went to EJ was that I wanted a physical person to talk to not a group (via the phone) like Vanguard.  EJ also rebalances as much as biweekly under the AS program via 90 days for EJ.  So I guess what I am trying to decide is do I want just a few mutual funds for basic market exposure for the lowest cost or do I want to be in more focused ETFs?  I also wonder if my 15+ ETFs really see more of a return than three of the Vanguard admiral funds would have over the same period?  Is everyone driving at Vanguard just for costs or are they actually seeing better returns than elsewhere?

If you insist on having someone manage your account a Vanguard advisor will do it for 0.3%. You can do it yourself for even less. There are plenty of people here who will point you in the right direction.

I use to work at EJ years ago. I still have friends who are there. I also have friends who are planners at Vanguard(and TIAA, Merrill, Schwab, Ameritrade, Prudential, Wells Fargo.... I've been in the industry awhile.). One friend actually left EJ and about 6 months ago he went to Vanguard... I just asked him to clarify some of this for me.

Cost: 1.5%+ funds/ETFs at EJ VS 0.3%+ admiral shares at VG. All in that is probably 1.65% for EJ VS <0.5% for Vanguard with an advisor. (Probably less than 0.15% if you do it yourself.)
Face to face: Local office VS video conference. EJ clearly wins here, but that is a really expensive premium just to shake someone's hand.
Rebalancing: Based on my understanding of it your EJ advisor is not rebalancing your account bi-weekly. He has you in a mutual fund of ETFs or a fund of mutual funds that is rebalanced by a separate manager. There are probably tens of thousands of people in the same fund as you. At Vanguard they call that a lifestrategy fund and they are insanely cheap, around 0.15%. Example: VSMGX. Vanguard advisors actually build a portfolio for you, not some generic fund of ETFs for everyone, and they do check it every 90 days.

Performance: 92% of Vanguard funds have outperformed their peer groups over the previous ten years. This isn't out of the ordinary. Low cost index funds normally outperform higher cost active funds over long time frames. I work in the industry. I have my money at Vanguard. I know guys who are analysts or managers for big expensive active funds & hedge funds who also own Vanguard index funds.  Vanguard funds didn't outperform because they are run by geniuses. They outperformed because they are lower cost. You could take the Total Stock index fund and break it down into a dozen different ETFs if you wanted to make it look complicated. Those ETFs are more expensive, they look more complicated, and they make you believe your advisor is doing more than he is. If Vanguard presented you with a few broad index funds it might look boring, but they were probably building you a lower cost more efficient portfolio.

Tax efficiency:  When I worked at EJ this meant put tax free bonds in the taxable account. Active funds aren't tax efficient so it wasn't something we talked about a lot. When I talked to my friend who is a planner at Vanguard we got into a debate about tax efficiency. We agreed bonds go in IRAs, stock index funds are better in taxable accounts, but domestic or international? Domestic stocks normally have more qualified dividends which get taxed at a lower rate while international stocks can get foreign tax credits for the taxes paid overseas. If you have a choice which one is more tax efficient in the taxable account? I'll save you the boring details of that debate. I will say I would expect a portfolio built at Vanguard to be a lot more tax efficient than a portfolio built at EJ. Oh, as an example those broad index funds are probably more tax efficient than a bunch of ETFs that are getting bought and sold on a bi-weekly basis...
« Last Edit: August 11, 2016, 06:38:30 PM by Indexer »

Travis

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Re: Getting out of Edward Jones
« Reply #20 on: August 11, 2016, 07:13:38 PM »
So I realize that fees are expensive at EJ (I'm currently there).  I'm in the Advisory Solutions account with a bunch of ETFs and I pay like 1.5% annually (I have the exact number at home) on the total under mgmt.  I'm really considering the move but the reason I went to EJ was that I wanted a physical person to talk to not a group (via the phone) like Vanguard.

[Emphasis mine.]

Your are essentially paying extra for the privilege of having face time with an individual.  Is paying a portion of his/her salary is worth 1.5% of your assets each year?

Yeah, 1.5% is a really expensive for this... With a $1 million portfolio, paying $15,000 a year for this is insane to me. I have Fidelity like the other person mentioned and I think I have the ability to talk to an actual person at the Fidelity store/office place near by, I've just never had the desire. I'm in 0.05% ER ETFs and pay nothing on top of that.

It's worse than that.  Removing 1.5% from a 7% increase every year for 20 years equals one quarter of your future portfolio.  Think about how much you lost to those fees and how much longer you'd have to work to make it back.  Paying 1.5% might make you feel better today.  Will you feel just as good when you realize you had to work an additional 10 years to make up the difference?  It is the very definition of being nickled and dimed to death.

kenaces

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Re: Getting out of Edward Jones
« Reply #21 on: August 11, 2016, 08:44:41 PM »
wow 1.5% a lot to pay!

I am not anti-advisor and think that they can add real value with advice and calming hand during rough times when you might make a big mistake, but the industry has changed and you can get good advice/service for much less.  I think the roboadvisors are around 0.25% and I think some of them have option to call and speak with someone.  You can also go the schwab route and visit them at office for no charge.

primozaj

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Re: Getting out of Edward Jones
« Reply #22 on: August 12, 2016, 07:50:39 AM »

Performance: 92% of Vanguard funds have outperformed their peer groups over the previous ten years. This isn't out of the ordinary. Low cost index funds normally outperform higher cost active funds over long time frames. I work in the industry. I have my money at Vanguard. I know guys who are analysts or managers for big expensive active funds & hedge funds who also own Vanguard index funds.  Vanguard funds didn't outperform because they are run by geniuses. They outperformed because they are lower cost. You could take the Total Stock index fund and break it down into a dozen different ETFs if you wanted to make it look complicated. Those ETFs are more expensive, they look more complicated, and they make you believe your advisor is doing more than he is. If Vanguard presented you with a few broad index funds it might look boring, but they were probably building you a lower cost more efficient portfolio.


I think I knew this in the back of my mind but didn't want to believe it.  Seeing this (and your entire post) is very much appreciated, thank you for taking the time to write it.  I think I am just going to finish the process with Vanguard (managed account) and get out of EJ; I have to open another account for the inherited IRA (they only set up a Roth).

I did some internet searching the other day to see how they (EJ) were paid and it was a bit surprising how much of it is commissions based.

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Re: Getting out of Edward Jones
« Reply #23 on: August 12, 2016, 08:05:52 AM »
Open the inherited IRA account elsewhere and transfer the assets directly. Should not be necessary to open it at EJ.

primozaj

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Re: Getting out of Edward Jones
« Reply #24 on: August 17, 2016, 09:09:13 AM »
Open the inherited IRA account elsewhere and transfer the assets directly. Should not be necessary to open it at EJ.

It was already at EJ.  I have to open the account at Vanguard so they can transfer it in kind.  They can't mix Roth and Traditional assets.

Indexer

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Re: Getting out of Edward Jones
« Reply #25 on: August 17, 2016, 06:13:09 PM »

Performance: 92% of Vanguard funds have outperformed their peer groups over the previous ten years. This isn't out of the ordinary. Low cost index funds normally outperform higher cost active funds over long time frames. I work in the industry. I have my money at Vanguard. I know guys who are analysts or managers for big expensive active funds & hedge funds who also own Vanguard index funds.  Vanguard funds didn't outperform because they are run by geniuses. They outperformed because they are lower cost. You could take the Total Stock index fund and break it down into a dozen different ETFs if you wanted to make it look complicated. Those ETFs are more expensive, they look more complicated, and they make you believe your advisor is doing more than he is. If Vanguard presented you with a few broad index funds it might look boring, but they were probably building you a lower cost more efficient portfolio.


I think I knew this in the back of my mind but didn't want to believe it.  Seeing this (and your entire post) is very much appreciated, thank you for taking the time to write it.  I think I am just going to finish the process with Vanguard (managed account) and get out of EJ; I have to open another account for the inherited IRA (they only set up a Roth).

I did some internet searching the other day to see how they (EJ) were paid and it was a bit surprising how much of it is commissions based.

Glad I could help.

And yes, compensation at EJ is primarily commissions. They might get profit sharing or bonuses, but those bonuses are normally tied to how much the advisor generated in commissions.

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Re: Getting out of Edward Jones
« Reply #26 on: August 17, 2016, 07:50:17 PM »
After taking MUCH too long to do it I have FINALLY taken everything out of EJ and even though I could have done it smarter, I'm feeling good about it.

I rolled over the ROTH and the IRA's and then I sold the rest and then moved it because it couldn't be rolled over. As far as what was in the ROTH and the IRA, I have gradually been selling them and buying Vangaurd funds instead.

We were fortunate in that we got left a little bit of money this and we have put some aside as a security cushion.  In order to counter any "gain" from the sale of the EJ funds I have been maxing out the 401K contribution so that our taxes will be lower this year. The little cushion on the side is in case we aren't living within our means now that we are saving so much this year.

primozaj

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Re: Getting out of Edward Jones
« Reply #27 on: October 05, 2016, 11:49:06 AM »
I am days away from having everything out of Edward Jones.  I was able to do some moves prior to the switch to minimize the sale charges.  I still have to pay $95 an account to close them, but being in a guided program (which is what I was looking for) at 0.3% vs. 1.5% is going to be worth the $190.  My future self will thank me.

 

Wow, a phone plan for fifteen bucks!