Need some help with these American Funds numbers . . .

[Matt (Semper Fi)]

Hello fellow 'stachians,

First of all, I hope that I'm posting this in the right place for maximum help.  I want to switch over to index funds in Vanguard.  Right now, my wife and I have Roth IRA accounts with American Funds, and the accounts were opened by our financial advisor about four years ago (we found this advisor by searching for an ELP through the Dave Ramsey network).  Here's what's in my account:

1.  Capital World Growth and Income Fund, Class A, CWGIX: Front load = 5.75%, Expense ratio = 0.77%, Yield = 2.29%

2.  Fundamental Investors, Class A, ANCFX:  Front load= 5.75%, Expense ratio = 0.60%, Yield = 1.34%

3.  American Mutual Fund, Class A, AMRMX: Front load = 5.75%, Expense ratio = .58%, Yield = 1.96%

4.  AMCAP Fund, Class A, AMCPX: Front load = 5.75%, Expense ratio = 0.67%, Yield = 0.00%

5.  Smallcap World Fund, Class A, SMCWX: Front load = 5.75%, Expense ratio = 1.10%, Yield = 0.00%

6.  New World Fun, Class A, NEWFX: Front load = 5.75%, Expense ratio = 1.04%, Yield = 0.58%

My wife's account:

1.  The Growth Fund of America, Class A, AGTHX:  Front load = 5.75%, Expense ratio = 0.66%, Yield = 0.57%

So that is what our Roth's look like.  We have a total of about 25k in our accounts (19k in mine, about 6k in my wife's).  I know, it should be a lot more after four years, but we've been aggressively paying down our mortgage, which will be gone by Feb. 2017 (awesome).  But that just means that we will have another 4k to start pumping into our Roths, and I don't want to throw good money after bad.

Do those percentages look atrocious?  From what I have read over the past several months, those are not the greatest numbers to have (I'm not sure what "yield" refers to, but the front load fees and expense ratios don't seem very good).  I would LOVE to get some advice on what to do with these American Funds accounts.  Thanks!

[NoStacheOhio]

The expense ratios are suboptimal, but not insane. It's the front load that's cringe-inducing.

Just cut your losses and transfer to a low-cost brokerage (Vanguard/Fidelity/Schwab). Whether you sell first and transfer cash, or transfer shares and sell after is going to depend on the fees to sell. Figure out which way is less expensive, then transfer the accounts post-haste.

[Matt (Semper Fi)]

Thanks for the response, Nostache!  I was reading about front-end loads last night, and I was a little confused about how they are taken out.  Is it a one-time fee that is only assessed when you first open the account, and then never assessed again, or is it assessed every time you add new money into the account?  I think when we first opened my Roth account, we only deposited maybe 5k.  That means the advisor made about 300 bucks (not that I feel sorry for him at all -- he seems well off) off of the initial transaction.  Does he not make any more money off of our "partnership"?

[NoStacheOhio]

Thanks for the response, Nostache!  I was reading about front-end loads last night, and I was a little confused about how they are taken out.  Is it a one-time fee that is only assessed when you first open the account, and then never assessed again, or is it assessed every time you add new money into the account?  I think when we first opened my Roth account, we only deposited maybe 5k.  That means the advisor made about 300 bucks (not that I feel sorry for him at all -- he seems well off) off of the initial transaction.  Does he not make any more money off of our "partnership"?

My understanding is that any new money is subject to the front-load, but I'm not an expert, and have never had a loaded fund.

You may also be paying account fees, and the advisor is probably getting kickbacks for selling the funds. There are a couple Edward Jones threads floating around here that provide some insight.

There's also this: http://kronstantinople.blogspot.com/p/edward-jones-saga.html

edit: you may or may not be with EJ, but much of the same stuff applies to other companies and advisors

[uwp]

You would be paying loads on any new money you put in.
Although the load % may be smaller as your accounts get bigger (look up "break-points").
Your advisor is also likely getting ~0.25% a year from the funds you currently own (12b-1 fees).  Those are built-in to those annual expense ratios.

Probably best to just to roll it all to Vanguard, rather than continue to contribute to these.  With retirement accounts, there wouldn't be tax consequences like there might be with taxable accounts. 

I like American Funds (and will defend them from time to time), but that front load is killer.

[ltt]

I have one of the American Funds.  I have some money put in automatically every month....I believe I pay that front-end load every time.  I really need to put the funds somewhere else.

[Matt (Semper Fi)]

Thank you, everybody, for your responses.  I know more now than I did yesterday morning!