Intimidated by Switching to Vanguard

[Goatmilker]

Hi, everyone. My husband and I have been investing with Edward Jones for over five years now, mindlessly dumping money in and filling the trash with unopened statements. Tonight I looked at our fees, and they are well over $4000 per year!!

We both have simple IRAs, roths, a DAF and a regular account (single stocks) with EJ. Last year we had to do back door roths, which was a lot of paperwork and IMO confusion, since I ended up moving my Vanguard roth over to EJ. Finally I logged on to all of our accounts (Vanguard, EJ, the DAF site) simultaneously. That's when I noticed all the crazy EJ fees.

I would love to sit down with our adviser and just ask her how to move everything to Vanguard. But she's a 60+year old lady, doesn't understand millennials or FIRE, and obviously wants all of our money in there. When I mentioned opening a DAF she didn't seem too excited about the idea, even though it saves us a lot in taxes and is helping us toward our goal to give more. All that to say, I don't think she has our best interests at heart.

We originally went to a financial adviser because 1) things were getting complicated with Hubby's business, and 2) we thought we would get better returns with an actively managed account. From the beginning we haven't seen better returns, but it has been nice to have our butts covered tax-wise and not think much about investing. I am just wondering if the convenience is worth $350 per month. I feel like there is SO much paperwork and signing things with EJ, and that it might be easier if I can just manage our money online instead of having an in-person meeting or making phone calls (which I hate).

I'm a SAHM mom to a 2 year old, HS education, not much knowledge in investing, so moving everything over to Vanguard (also: confrontation with our adviser lady who is over twice my age) seems very intimidating. Hubby is supportive but not willing to manage our investments, so it would be primarily my job. My biggest fear is doing something wrong and having the IRS come after us. Can you recommend some resources that would help me in this, or even if it's worth doing? I'm most intimidated by the back door roth, or switching back to regular roth (we won't make as much this year).

[seattlecyclone]

Moving can be daunting. There will be paperwork and maybe a few phone calls. Once it's done it's so worth it though. You'll be able to manage everything online, and it really doesn't need to be hard at all. They have a line of LifeStrategy funds and target retirement funds. It's perfectly reasonable to pick just one of those funds that fits your risk tolerance and put all of your investments in there to start. At some point you may decide to learn more about investing and make a bit more of a fine-grained selection, but this is by no means necessary.

Let me guess: each of your Edward Jones accounts is invested into about a dozen different things? This seems to be a common tactic these "advisors" do to make themselves seem indispensable (see how complicated this portfolio is! no way you could manage it yourself, right?) while also maximizing their trading commissions.

[MDM]

Your choice to move to Vanguard (and I'd say the same if you were considering Fidelity or Schwab) is good.  If you call Vanguard, they will help walk you through everything needed to transfer from EJ.  Vanguard gets a lot of practice doing this, and you don't have to say anything to EJ.

Advisors salespeople at EJ (and similar firms) have a vested interest in making investment seem complicated.  It does not need to be.  For example, you could take all your investments at EJ and put them into the same fund, Vanguard LifeStrategy Growth Fund (VASGX), in each of your Roth IRA, traditional IRA, and taxable accounts (maybe DAF too but I don't know how Vanguard does its DAFs).

One fund for each account.  Done.  Get on with your life.

Now, there are ways to tweak that plan that could be marginally better, but even that would almost certainly be a huge improvement over what you have at EJ.

If someone messes up a Backdoor Roth process, it's usually by doing something incorrect with Form 8606.  You could use the 'Form8606' tab in the case study spreadsheet, and compare its results with what you filed.  If they match, all is probably well.  Switching back to a regular Roth contribution takes no paperwork with the IRS at all: just do it.

One caveat: when you wrote "simple IRAs" did you mean SIMPLE IRA (directly associated with a business) or a Traditional IRA that you each established completely unrelated to a business?  In either case, did you include the 31-Dec-2018 balance for those IRAs on line 6 of Form 8606?

There is plenty more "getting started" material available, and sites such as this and Bogleheads (both wiki and forum) with people willing to help.

A good first step for you would be to call Vanguard and ask them about moving your accounts from EJ.  See how that goes, and come back here and/or Bogleheads as needed with questions.  Or if you have more questions now, just ask.  And good luck!

[Xlar]

Your choice to move to Vanguard (and I'd say the same if you were considering Fidelity or Schwab) is good.  If you call Vanguard, they will help walk you through everything needed to transfer from EJ.  Vanguard gets a lot of practice doing this, and you don't have to say anything to EJ.

Advisors salespeople at EJ (and similar firms) have a vested interest in making investment seem complicated.  It does not need to be.  For example, you could take all your investments at EJ and put them into the same fund, Vanguard LifeStrategy Growth Fund (VASGX), in each of your Roth IRA, traditional IRA, and taxable accounts (maybe DAF too but I don't know how Vanguard does its DAFs).

One fund for each account.  Done.  Get on with your life.

Now, there are ways to tweak that plan that could be marginally better, but even that would almost certainly be a huge improvement over what you have at EJ.

If someone messes up a Backdoor Roth process, it's usually by doing something incorrect with Form 8606.  You could use the 'Form8606' tab in the case study spreadsheet, and compare its results with what you filed.  If they match, all is probably well.  Switching back to a regular Roth contribution takes no paperwork with the IRS at all: just do it.

One caveat: when you wrote "simple IRAs" did you mean SIMPLE IRA (directly associated with a business) or a Traditional IRA that you each established completely unrelated to a business?  In either case, did you include the 31-Dec-2018 balance for those IRAs on line 6 of Form 8606?

There is plenty more "getting started" material available, and sites such as this and Bogleheads (both wiki and forum) with people willing to help.

A good first step for you would be to call Vanguard and ask them about moving your accounts from EJ.  See how that goes, and come back here and/or Bogleheads as needed with questions.  Or if you have more questions now, just ask.  And good luck!

I second this post! For all your after tax, traditional IRA, and Roth IRA. Just setup an online account with Vanguard and then call them! When I did it they knew exactly what to do and moved everything over for me. I didn't have to interact with EJ at all.

I'm not familiar with a Simple IRA so I don't want to give you bad advice. But I would expect it to be just as easy as all the other accounts.

Good luck! And it's definitely worth persevering, as you've discovered EJ does not have your best interests in mind.

[insufFIcientfunds]

I moved our assets from Morgan Stanley to Fidelity in July 2018. I made it feel like a daunting process that was really hard, but it wasn’t at all!

I was nervous so I made an account then put $1k in it and invested it to see what it was like to move money from my savings at my credit union to Fidelity, then to purchase a security. I was wondering about timing, ease of use, all those little things that get you comfortable with the process. Once I did it, it was easy, and I actually did the transfer of 2 Roths and a taxable account online. I did call to make sure I was doing things right, and they are super nice. I am sure Vanguard is the same way.

The assets in my taxable account transferred over with all the individual stocks that were in there at MS. I slowly sold them off and have purchased index funds mostly, some sector mutual funds I like. If you are nervous, start an account like I did, and buy a few hundred dollars of something. Get a feel for the process.
 
Good luck!

[GoCubsGo]

I don't know if Vanguard has branches but Fidelity does.  If there is one close to you I would set up an appointment.  Sometimes sitting with a live person helps.  They basically walk you through the process (sure they would like you to use Fidelity funds as the portfolio building blocks but they absolutely were not pushy about it).  I happened to work across the street from one so it was convenient.  I have since sent 2 others over there that had a mish-mash of different plans with different advisers.  Both said Fidelity made it easy.

Imagine what the compounded value to your retirement account in 20 years will be for a day or so of pain.  Vanguard and Fidelity also have their in house "robo" advisors that will manage your money for you for much lower than EJ. 

[smoghat]

For everyone who said “Call them.” YES! They will help you do it.

[ysette9]

Don’t walk from Edward Jones, run away from them like the wind! Their business model is to fleece unsuspecting clients.

As others have said, give vanguard a call and let them help you. There is no need to csll the EJ lady and explain anything. This is a pull-this thing, not a push, so just interface with Vanguard going forward.

And yes, educate yourself by reading the Bogleheads wiki page for getting started. I believe the link was provided above and you can also google it. Those wiki pages are great resources for self education.

[worldwideox]

We just moved everything from a local managed-asset firm to Vanguard, and while it was a lot of paperwork, everything really was easy-peasy. The Vanguard people are fantastic and have walked us through every step.

So glad we went through the hassle, because now it's almost done and we can move on with investing without dumb fees.

[FIRE 20/20]

Can you look into hiring either an accountant or a financial adviser to help with the transition and with anything that might be complex for you?  If you spend less than $4k / year on that person you still should come out ahead because index funds tend to do better than actively managed funds.  My guess is that paying a fee-only fiduciary financial adviser would save you money and would give you the peace of mind that you're getting from EJ.  And I also would guess that after 2-3 years of getting help from that person you will gain confidence to do more and more on your own.  Basically, the options aren't "Stay with EJ" vs. 100% DIY with Vanguard.  You can set up either a transition period or have a long-term relationship with a financial adviser that costs less than you're paying and gets you better advice. 

https://www.nerdwallet.com/blog/investing/3-reasons-to-hire-a-fee-only-financial-planner/

[Dicey]

Following along. We're in the process of doing this now. We hit a snag when Vanguard discovered an old, long closed account in my maiden name. We're jumping through a few extra hoops right now.

I'm posting to agree that VG will be very helpful in this process. I also want to warn you that EJ won't give you up that easily. You should expect multiple communications from EJ on what a huge mistake you're making. I don't have EJ, but I promise you, this will happen. Knowing what I do of EJ, they will lay it on even thicker than ours did. I'd bet money on it. Big money. Stay strong.

[Goatmilker]

If someone messes up a Backdoor Roth process, it's usually by doing something incorrect with Form 8606.  You could use the 'Form8606' tab in the case study spreadsheet, and compare its results with what you filed.  If they match, all is probably well.  Switching back to a regular Roth contribution takes no paperwork with the IRS at all: just do it.

One caveat: when you wrote "simple IRAs" did you mean SIMPLE IRA (directly associated with a business) or a Traditional IRA that you each established completely unrelated to a business?  In either case, did you include the 31-Dec-2018 balance for those IRAs on line 6 of Form 8606?

It's a SIMPLE IRA directly associated with our business. I'm not sure about Form 8606 since we have an accountant do our taxes. But I can look into it.

[Goatmilker]

BTW thank you everyone for the advice! That gives me a starting point and some good resources to look into. I really appreciate it!

[Indexer]

BTW thank you everyone for the advice! That gives me a starting point and some good resources to look into. I really appreciate it!

I'll second everyone else. RUN from EJ, and I used to work for EJ right out of college. I've seen how the sausage is made, and I wouldn't recommend them to anyone.

Call Vanguard, they can help you move everything. In addition, if it gets too complicated and you really want help Vanguard has advisors. They are fiduciaries(they are legally obligated to act in your best interest), they build low cost portfolios of index funds, and they only charge 0.3%. Yes, it would be cheaper to do it on your own. However, paying 0.3% is much cheaper than EJ so if you have any hesitation about making the move it's still a much better option than EJ.

[Morning Glory]

Hi, I have previously transferred a Roth IRA and a taxable account from Wealthfront to Vanguard, which I was able to do completely online. I also rolled over an old 401k from ICMA into a Vanguard tIRA. I don't think I had to even call, but I might have had to fill out a paper and mail it for the 401k. I transferred the ETFs in kind and then sold only the ones with high fees, so I wouldn't have a lot of capital gains tax.