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Best way to extricate from managed accounts.
Old 04-27-2015, 01:57 PM   #1
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Best way to extricate from managed accounts.

My father has about $2 million being managed by a Fidelity private clients group, about $300k of that is IRA and rest taxable. He's been taking RMDs.

I've told him he's paying through the nose but he's expressed happiness because the account has gone up (though probably not necessarily outperforming the market) the past couple of years. He also apparently likes dropping into the local Fidelity branch, pocketing some K cups.

But he's been paying .8% maintenance so I pointed out he's paying a lot for the service, told him about VG.

So now finally he's interested in getting away from them but the question now is, how to do so without getting hit by massive cap gains.

He could probably transfer the IRA funds and get them into a VG fund without tax hit?

But his taxable funds are probably in some kind of proprietary funds so he wouldn't be able to transfer them to another institution without selling shares?
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Old 04-27-2015, 02:01 PM   #2
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Call Vanguard. He may be able to transfer the securities in his taxable account in-kind to a Vanguard Brokerage Services account which would not be a taxable event.

The IRA is easier since there is no tax impact... just sell them in the Fidelity account, transfer the money to his new Vanguard IRA and then buy what you want.
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Old 04-27-2015, 02:10 PM   #3
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Quote:
Originally Posted by explanade View Post
My father has about $2 million being managed by a Fidelity private clients group, about $300k of that is IRA and rest taxable. He's been taking RMDs.

I've told him he's paying through the nose but he's expressed happiness because the account has gone up (though probably not necessarily outperforming the market) the past couple of years. He also apparently likes dropping into the local Fidelity branch, pocketing some K cups.

But he's been paying .8% maintenance so I pointed out he's paying a lot for the service, told him about VG.

So now finally he's interested in getting away from them but the question now is, how to do so without getting hit by massive cap gains.

He could probably transfer the IRA funds and get them into a VG fund without tax hit?

But his taxable funds are probably in some kind of proprietary funds so he wouldn't be able to transfer them to another institution without selling shares?
Are you interested in him, or yourself?

Let it alone.

Ha
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Old 04-27-2015, 02:12 PM   #4
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Call Vanguard. He may be able to transfer the securities in his taxable account in-kind to a Vanguard Brokerage Services account which would not be a taxable event.

The IRA is easier since there is no tax impact... just sell them in the Fidelity account, transfer the money to his new Vanguard IRA and then buy what you want.
+1 - exactly.

I dumped my FA with Schwab and had VG transfer almost everything. I did have to sell 2 equity funds that would not transfer. However, I used a little tax loss harvesting to help offset the gains of those two fund.
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Old 04-27-2015, 02:20 PM   #5
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What are k cups ?

Usually one can transfer securities from broker to broker without selling / without triggering cap gains. Even mutual funds can typically be transferred.
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Old 04-27-2015, 02:41 PM   #6
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What are k cups ?

Usually one can transfer securities from broker to broker without selling / without triggering cap gains. Even mutual funds can typically be transferred.
The premeasured coffee cups.

I wonder if they have him in some proprietary instruments which can't be easily transferred?


No I have no interest in his money. I'm sure my parents will leave me some but my sisters can have it all as they're in dire need and I should be fine.
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Old 04-27-2015, 02:45 PM   #7
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He could keep his money right there at fidelity and get out of the managed stuff.
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Old 04-27-2015, 02:45 PM   #8
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The premeasured coffee cups.

I wonder if they have him in some proprietary instruments which can't be easily transferred?

...snip....
I reviewed a Fidelty managed account proposal for my sister. There were a few Fidelity proprietary funds(meaning you can't buy them directly), some regular Fidelity funds and some openly traded non-Fidelity funds in her proposal.

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Old 04-27-2015, 03:49 PM   #9
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He could keep his money right there at fidelity and get out of the managed stuff.
+1

Nothing wrong with Fido. You just don't need the managed account. Assuming it's any of your business.

I would have been happy if my Mom's portfolio had had a 0.8% management fee. She was at 3% at a traditional brokerage, with performance that looked worse than simple index funds. I set her up with four Fidelity Spartan Advantage index funds, which are very low cost. No management fee. On the other hand, I have to put in a bit of work to make sure everything is running smoothly and RMD's are withdrawn on time with appropriate taxes withheld. No good deed will go unpunished.
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Old 04-27-2015, 04:27 PM   #10
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I'd stick with Fidelity but get rid of most of the managed stuff. Perhaps leave 50% in the managed and do it yourself on the other 50%. See how it does for a year and then change as appropriate. I know a couple of folks who have there money managed with Fidelity and they are OK with it.
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Old 04-27-2015, 04:54 PM   #11
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What are k cups ?
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Old 04-27-2015, 05:48 PM   #12
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Skip the Advisor part and move into regular Fidelity stuff. He can still go to the local Fidelity office and steal K cups to his caffeinated heart's content.
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Old 04-27-2015, 09:04 PM   #13
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The fido private clients group comes from account size not using managed funds, I have same and use ETFs like VTI and pay $7.95 per trade and enjoy their k-cups as well. In my view nothing wrong with fido just need to commit to low cost funds.


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