Leaving EJ

[theolympians]

My wife and I are leaving EJ. I don't like the guided solutions drip, drip, drip of money from our accounts for no activity on their part. I know there are few pro-EJers here. I am looking at transferring our IRAs to Vanguard. The missus, however, likes brick and mortar and having a person to talk to face to face (I do too, which helps explain why we were with EJ to begin with).

She mentioned Schwab and Fidelity. I know nothing about them. My concern is that they would have some other convoluted pay structure like EJ. Any thoughts? Are they sales commission based? Hourly? Or?????

[sol]

Their funds charge an expense ratio, and if all you're doing is buying funds then that's all you pay.  Depending on your quantity of assets, they provided varying amounts of personalized one v one services for "free", which really means as part of their expense ratio.

Unlike EJ, they generally don't make a commission for steering you towards funds that have higher fees, which is sort of the EJ business model. 

[CowboyAndIndian]

...
She mentioned Schwab and Fidelity. I know nothing about them. My concern is that they would have some other convoluted pay structure like EJ. Any thoughts? Are they sales commission based? Hourly? Or?????

Run, dont walk to move your funds out of EJ. They have only one interest, and that is theirs!

My first choice would be Vanguard. Truly the best.

My second choice would be Schwab or Fidelity. I am experienced with both, presently using Schwab with a lot of Vanguard ETF's in my portfolio.

[Hargrove]

The entire EJ business model is based on your fear that you don't know what you're doing. They will happily charge you out the nose to confirm you that you do not, in fact, know what you're doing, and that it's a good thing they're around to take all your money.

What is it you need to talk to a consultant about? Seriously, make a list of anything you ever talked to your consultant about.

I used Vanguard for years and never called them for anything. I can't even think of the thing I would ask.

Don't time the market, don't stock pick, invest in index fund(s). Investing now is statistically better than investing later. Investing more is statistically better than investing less.

There are all sorts of reasons to talk to an accountant or lawyer about what to DO with your investments regarding life decisions or how to handle taxes etc, but not which investments to pick or how much to invest in them. You can get detailed responses from an army of volunteers for any question you could want right here.

As sol said, there's ONE fee - expense ratio - that you should generally be paying, and that is ALL you pay at Vanguard. There's no load fee, no consultant fee, no hand-holding fee, no sorry-we-kept-11%-of-your-account-in-cash-so-we-could-loan-it-out-to-other-people... thing... you own a slice of Vanguard by investing in it, and it has forced every other serious player to switch to the most friendly consumer investing policies the world has ever seen.

Unless you really like the, uh, friendly neighborhood EJ guy.

[theolympians]

Thanks both. I like Vanguard, I have several of their funds in my 457 plan. EJ has my and the wife's Ira's; and a taxable account. I prefer Vanguard, though we own some individual stocks and they do not offer those (from what I've read).

Schwaub has a local office, with a person you can talk to. Looking at their website, it seems there are flat fees for service. My concern is we would go there and the sales pitch would begin. Is Schwaub essentially fee for service or is there an up-sell with them as well?

[Hargrove]

Vanguard will absolutely handle individual stocks.

You can easily pay similar to Vanguard fees with Schwab. You could also pay more. You have to work hard to pay too much at Vanguard. The more you lean on wanting to "see someone," the more likely you are to be sold into something that sounds like "guided solutions."

[theolympians]

The entire EJ business model is based on your fear that you don't know what you're doing. They will happily charge you out the nose to confirm you that you do not, in fact, know what you're doing, and that it's a good thing they're around to take all your money.

What is it you need to talk to a consultant about? Seriously, make a list of anything you ever talked to your consultant about.

I used Vanguard for years and never called them for anything. I can't even think of the thing I would ask.

Don't time the market, don't stock pick, invest in index fund(s). Investing now is statistically better than investing later. Investing more is statistically better than investing less.

There are all sorts of reasons to talk to an accountant or lawyer about what to DO with your investments regarding life decisions or how to handle taxes etc, but not which investments to pick or how much to invest in them. You can get detailed responses from an army of volunteers for any question you could want right here.

As sol said, there's ONE fee - expense ratio - that you should generally be paying, and that is ALL you pay at Vanguard. There's no load fee, no consultant fee, no hand-holding fee, no sorry-we-kept-11%-of-your-account-in-cash-so-we-could-loan-it-out-to-other-people... thing... you own a slice of Vanguard by investing in it, and it has forced every other serious player to switch to the most friendly consumer investing policies the world has ever seen.

Unless you really like the, uh, friendly neighborhood EJ guy.

Could you be a bit more condescending, that might help me understand more of what you are writing

 We went with EJ several years ago when they essentially charged nominal rates ($40 a year). Though you are more wise than we, it was helpful to sit and ask for advice. It would be great to know everything and never have a question about anything related to the market and investing. Though here we are, and people post questions daily about the market and investing.

I don't time time the market, we do own individual stocks which we have owned for ten years + (not speculating), we primarily invest in index funds within our retirement accounts--which are maxed, and our IRA's. I get investing now with more is better than later with less, or whatever you wrote. We have invested consistently for decades.

My question dealt with looking at our options going forward. I am sure we are not the only ones dealing with this, and we won't be the last.

[Hargrove]

theolympians, the condescension was intended for EJ, and their business model of taking advantage of people asking for help. As I wrote, you have an army of volunteers happy to answer whatever you like here. I'm sorry I didn't do it to your liking.

No offense to you was intended - I'm asking you to think seriously about what it is you need a consultant at a brick and mortar to do for you. Your preference for that in-person interaction is what salespeople who can collect fees off your investments prey upon. You have excellent alternatives (like this forum) available to you, for free.

[Hargrove]

What you wind up paying any broker:

Commissions: usually $5-$7 a trade on an individual stock or ETF. Mutual funds are sometimes more. Vanguard lets you trade its own funds and ETFS (e.g. VTSAX) for totally free commissions and extremely low expenses. You only pay applicable commission fees when you initiate and complete a trade.

Expense ratio: the % of money invested, by you, charged by a mutual fund or ETF management agency. Vanguard is usually a tiny fraction of a percent. This money is charged annually.

SEC fee: the penny (or few) you sometimes give the SEC on a trade.

These are the only fees you should accept.

You can get hit with anything from a "load-fee" for the privilege of investing in a (bad) mutual fund, to a "management fee" for a guided portfolio (which is lost IN ADDITION to the types of fees mentioned above), to various other charges and fees that Vanguard (and usually Schwab, Fidelity) just don't engage in.

In general, you should know that having a person looking over your portfolio is expensive. If you make 7% returns after inflation and give up 2% in management fees, you're giving up a substantial amount of your potential gains. The culture of the forum is usually strongly against this management because, statistically, an index fund that you buy and just hold onto does better than basically anything else in the long term.

[theolympians]

Hargrove thank you for your responses.  Perhaps I am a little jumpy, and too sensitive. I appreciate the feedback.

Anyhoo, I read your latest post and confirms Vanguard is the way to go. The missus wants to keep her stocks, I am open to selling mine and going with admiral shares.

[Telecaster]

My wife and I are leaving EJ. I don't like the guided solutions drip, drip, drip of money from our accounts for no activity on their part. I know there are few pro-EJers here. I am looking at transferring our IRAs to Vanguard. The missus, however, likes brick and mortar and having a person to talk to face to face (I do too, which helps explain why we were with EJ to begin with).

She mentioned Schwab and Fidelity. I know nothing about them. My concern is that they would have some other convoluted pay structure like EJ. Any thoughts? Are they sales commission based? Hourly? Or?????

I have accounts with both Vanguard and Fidelity.  I have a business account with Fidelity and my self-employed 401(k) is also with Fidelity, so the bricks and mortar aspect comes in handy for me.  Now, I've never asked them for investing advice, but all my interactions have been 100% free. 

The smart way to invest is by buying low-cost index funds.  Both Fidelity and Vanguard have excellent options in that regard. 

[Hargrove]

Hargrove thank you for your responses.  Perhaps I am a little jumpy, and too sensitive. I appreciate the feedback.

Anyhoo, I read your latest post and confirms Vanguard is the way to go. The missus wants to keep her stocks, I am open to selling mine and going with admiral shares.

It can be easy on my side to narrate too many conversations together, so I'm sorry you felt snubbed. My frustration with EJ is partly because people I care about, who are just nice people without a financial background, stick with them, proudly showing a statement with "no fees." They even showed me the statement, once. I asked if they thought EJ was working for free, and they said "well, no," scratched their heads a moment, and went right back to "but we like our guy." The finance-types should remember that people asking for help, however, usually haven't already had the conversation. Vanguard is different because you own part of the company and they answer to you as a shareholder - they have been so successful, OTHER companies have had to reinvent their for-profit models to keep investors, which has been really good for the main street investor.

On a $500,000 portfolio, by the way, a 2% management fee is $10,000 every single year, given for the privilege of having a guy you can call. EJ management fees can get much higher than that. I hope you'll find that you can access the resources you need without imperiling your investments. It's no lie that people lose hundreds of thousands and even millions to management schemes like EJ's over their investing lives.

From Trifele in another thread, a breakdown of all possible broker fees:
https://www.nerdwallet.com/blog/investing/brokerage-commissions-fees/

As for where to put your money, the easiest two answers are VTSAX and/or the S&P500:

http://fortune.com/2019/02/26/warren-buffett-investment-strategy/
https://www.cnbc.com/2018/01/03/why-warren-buffett-says-index-funds-are-the-best-investment.html

Again, Vanguard will hold and trade individual stocks for you, and larger portfolios eventually get lower fees, too. "Fees" in this case only applies to commission fees, charged at the moment of a stock or ETF trade, per trade, and Vanguard doesn't charge any commission for their own funds. If you buy 100 shares of a private company, say Ford, you will pay that fee whenever a trade is completed, but you won't pay an expense ratio after that because it's not a managed fund.

[Indexer]

Hargrove thank you for your responses.  Perhaps I am a little jumpy, and too sensitive. I appreciate the feedback.

Anyhoo, I read your latest post and confirms Vanguard is the way to go. The missus wants to keep her stocks, I am open to selling mine and going with admiral shares.

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. IMO Hargrove was being nice.

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.

[theolympians]

Hargrove thank you for your responses.  Perhaps I am a little jumpy, and too sensitive. I appreciate the feedback.

Anyhoo, I read your latest post and confirms Vanguard is the way to go. The missus wants to keep her stocks, I am open to selling mine and going with admiral shares.

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. IMO Hargrove was being nice.

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.

I appreciate the insider knowledge. We are pulling out of EJ.

[UnleashHell]

I have individual stocks that I have held for a long time within Vanguard and and no problems with them. Its easy to keep them if thats what you wish.
but do switch to them. Give them a call and they'll walk you through the process. Its pretty easy.

[Car Jack]

Getting out of EJ to anywhere is your first priority.

I have had accounts with Vanguard, Fidelity, Schwab and TDAmeritrade.  Recently, I moved my Vanguard account over to TDAmeritrade, in kind.  Vanguard has become notorious with giving wrong information.  I wanted to simply convert my Vanguard mutual fund into an equivalent ETF.  Vanguard told me I couldn't do that, and would have to first sell, then buy.  I found from another forum that there's some special number to call about ETFs.  They gave me the correct information to do a conversion without getting out of the market.  Well, you know, I don't want to have to have the double secret phone number to get the right answer.  As Vanguard is now the highest cost of all my brokers, I pulled everything out.

With respect to brick and mortar.....I've stepped foot into Fidelity once ever, while attempting to fill out a New York Life form to move $3000 into Fidelity from an old 403b.  They were helpful and filled out the form, notarized it and gave us the correct address to send everything.  No sales pitch.

When my wife opened an account at Schwab, she popped up for identity verification so she went in and did that.  They were very helpful, tried to sell her nothing and gave her the forms needed to link her account to mine.  Quite nice.  No sales pitch.

Neither of us have yet to step into a TDAmeritrade office, although I know where it is.  I have a brokerage account and now a tIRA (from Vanguard), so a good chunk of money.  I did receive a $600 bonus for moving in there.  They have no account closure fee, so if I ever do want to move, they don't penalize me for doing so.  I've spoken to the account guy at TDA and he's helped.  He did pitch the "come in for a free analysis" when I called to make sure the $600 hit my account, but it was more of just a mention that they offered this than any kind of pitch.

If you pay attention to the ERs and don't sign up for any management crap, you will do fine at any of these.

[theolympians]

Getting out of EJ to anywhere is your first priority.

I have had accounts with Vanguard, Fidelity, Schwab and TDAmeritrade.  Recently, I moved my Vanguard account over to TDAmeritrade, in kind.  Vanguard has become notorious with giving wrong information.  I wanted to simply convert my Vanguard mutual fund into an equivalent ETF.  Vanguard told me I couldn't do that, and would have to first sell, then buy.  I found from another forum that there's some special number to call about ETFs.  They gave me the correct information to do a conversion without getting out of the market.  Well, you know, I don't want to have to have the double secret phone number to get the right answer.  As Vanguard is now the highest cost of all my brokers, I pulled everything out.

With respect to brick and mortar.....I've stepped foot into Fidelity once ever, while attempting to fill out a New York Life form to move $3000 into Fidelity from an old 403b.  They were helpful and filled out the form, notarized it and gave us the correct address to send everything.  No sales pitch.

When my wife opened an account at Schwab, she popped up for identity verification so she went in and did that.  They were very helpful, tried to sell her nothing and gave her the forms needed to link her account to mine.  Quite nice.  No sales pitch.

Neither of us have yet to step into a TDAmeritrade office, although I know where it is.  I have a brokerage account and now a tIRA (from Vanguard), so a good chunk of money.  I did receive a $600 bonus for moving in there.  They have no account closure fee, so if I ever do want to move, they don't penalize me for doing so.  I've spoken to the account guy at TDA and he's helped.  He did pitch the "come in for a free analysis" when I called to make sure the $600 hit my account, but it was more of just a mention that they offered this than any kind of pitch.

If you pay attention to the ERs and don't sign up for any management crap, you will do fine at any of these.

Thanks much. We've been looking at options, I am still partial to Vanguard. I am thinking we can keep our stocks there, and I can pick a fund and set it and forget it for 20 years.

We set up an appointment with our EJ rep. I know we don't need to do that, but the wife thinks they might waive the fees. I'm sure they won't, as the fees are their business model. I'll keep you posted.