Investment newbie and Ed Jones

[Wishing]

Hi all! I've been reading the forums regularly for the last year or so, but I've never posted. I'm 56, and thinking seriously about ER in the near future. I left a megacorp position a little over 2 years ago which resulted in halving my salary, so I've sort of been practicing for ER. I recently decided to go part time (75%) which reduced my salary even more. I'm not in a high stress job any more, but my bullshit bucket seems to get full faster, and I'm tired of dealing with the red tape and archaic practices in academia.

I have most of my assets (around 1.2 million) with Ed Jones because that's what my parents did, and I didn't have the time or the interest to learn anything about investing. I've never been exactly comfortable with Ed Jones, but, after reading some of the threads on this site, I've come to realize just how much my ignorance is costing me. I recently met with an independent financial consultant, and she went through my EJ statement and pointed out all the ways the company is making money off of me. Because of my investment ignorance, I asked her to help me with my retirement planning. She agreed - to the tune of $6000 for a one year retainer. She wouldn't do any investing for me, but would direct me to a broker who would charge 1% to "fix" my investments. I realize I'm playing catch-up now, but I'm trying to educate myself to the point that I can self direct my accounts. My alarm bells started going off when I received her contract for the one year retainer. I think I can go with a company like Vangard and not shell out the 6K plus 1% of my assets and come out ahead - or at least not do any major financial damage.

I think I know what your answers will be, but I'd like to know if you think I should pay for this one year "education" or call Vangard and teach myself. Thanks for any and all opinions and advice!

 

[samclem]

I think I know what your answers will be, but I'd like to know if you think I should pay for this one year "education" or call Vangard and teach myself. Thanks for any and all opinions and advice!

1% is approx $12,000 for you. If this takes you 100 hours over the course of a month or two, that's still a pretty good (tax free) hourly rate!)You're already here and you already know the problem you've got, that's 80% of the "fix." You can do this yourself. If you go with the new advisor you'll still have no guarantee that things are right unless you review them. To review them you'll have to know right from wrong anyway, so there's no avoiding the research. It's really not hard t do anyway, and will serve you for the rest of your life.
If you want, build your own plan and then consult with an advisor who charges by the hour to review your plan and polish it up. Consult the books in the FAQ threads here for good references. Nobody will care as much about your money as you do.

But, you knew we'd say that.

 

[RockyMtn]

As opposed to paying her $6k to find you a planner who is going to charge you 1% of your assets (sounds to me like she already knows who she is going to send you to) I would suggest you find a fee only planner to look at your investments and suggest a reasonable portfolio of etf's.

 

[MRG]

Think you could just go to Vanguard or Fidelity and they would help you out for nothing. While your learning pick up some investment books, there's a list on this site. I've recommended Millionaire Teacher to my DS as she has no confidence she can DIY. I know she can.

E.D. Jones has made a lot of folks money over the years, but they keep a very, very, good profit themselves. No sense looking back, a lesson to be learned.

Best wishes,

MRG

 

[Animorph]

I was OK with $6k for the FP one time, but directing you to a broker that will charge you 1% is no help at all. I'd try another FP.

 

[nun]

For people with over $500k Vanguard has a free planning service. They will help you through the whole process.

 

[MRG]

I re-read your original post. So you give her 6K, and she will give you a name? Your suspicions are correct.

MRG

 

[Bestwifeever]

....I have most of my assets (around 1.2 million) with Ed Jones.... I recently met with an independent financial consultant, and she went through my EJ statement and pointed out all the ways the company is making money off of me. Because of my investment ignorance, I asked her to help me with my retirement planning. She agreed - to the tune of $6000 for a one year retainer.
...

Ask her what her retainer would be to help with $120,000 (not any more difficult to handle 10 times that). Then call Vanguard/Fidelity/Schwab and see what they can do for you.

 

[nash031]

She agreed - to the tune of $6000 for a one year retainer. She wouldn't do any investing for me, but would direct me to a broker who would charge 1% to "fix" my investments.

This is like a "listing agent" in Real Estate, who charges you 1.5% to put your house on the MLS. Except in this case, with about two hours a day for a month or two, you can learn enough and open an account at Vanguard and get FREE advice (over $500k). I recommend saving yourself the money, learning a little bit (something about someone else telling me what to do with that which I need to sustain my livelihood... doesn't sit well), and do it yourself.

Investing isn't hard (logically... emotionally maybe!). I understand getting over apprehension is, but it's all in your head!

 

[panacea]

I don't understand what the $6,000 is for. Retirement planning isn't all that complex, particularly when you leave the investment planning out of it. If you really need help, find a reasonably priced fee-only advisor who will charge you hourly only for what you need including the investments... check out NAPFA online for a listing of fee-only advisors in your area and narrow your search to hourly advisors... or as others suggested just go to Fido or Vanguard.

 

[JoeWras]

My goodness... 6K and then 1% after. Don't do it. You already knew this.

You will probably need help in the transfer process. As others have mentioned here, Vanguard and others will waive fees at certain asset levels. The reason you may need some help is with taxes. IF you have to liquidate anything, you may incur taxes. Be careful. But good advisers know this. I'm not sure what can be transferred to Vanguard and what cannot. (Vanguard has a brokerage arm, so hopefully much can be transferred without a taxable event. And then optimized over time juggling all factors.) That's my only hesitation ... in that reaching 500k with Vanguard may take some careful work in the transfer process.

 

[Dawg52]

Go to Vanguard or Fidelity. Either one will help you and you will save a bundle in fees.

 

[pb4uski]

For people with over $500k Vanguard has a free planning service. They will help you through the whole process.

+1 no need to go alone - they will help you and explain everything.

 

[Wishing]

Thanks all for the responses! The financial planner I am working with is a fee-only member of NAPFA, and when I met with her, I thought I was getting an appraisal of my current investments and recommendations on how to proceed. The first meeting cost me $450. It was kind of a hodge-podge of topics ranging from wills, to long-term care insurance to investment 101. She made some good recommendations on my health insurance and had some sound advice, and the $6K didn't sound like a lot considering how much EJ is making off of me. Then she mentioned the 1% broker fee to fix the investments. I can think of a lot things I can do with $18K. I'm currently reading Millionaire Teacher and have a couple other books recently mentioned in the Forums. I don't think it will take me too long to get up to speed - this isn't rocket science, but it does take some thought. Thanks for the encouragement - this is a great group of folks!

 

[travelover]

I agree with with what others have said above about going with a low cost broker like Vanguard or Fidelity, especially if you have a Fidelity office nearby.

In addition, you can get a lot of personal hand holding for free over at Bogleheads, especially if you play humble and give them a detailed accounting of your holdings. Here is a format to use to post for a comprehensive answer: Bogleheads • View topic - Asking Portfolio Questions

In addition, you owe it to yourself to read a few basic finance books from this list: http://www.bogleheads.org/readbooks.htm

You will be giving up a yearly birthday card from Edward Jones, though.

 

[harley]

If nothing else, getting your money into VG/Fido while you are figuring out what to do will save you money just based on fees. Then, over time you can determine the most comfortable course for yourself without having been shedding dollar bills like that motorcycle guy on the Geico commercials.

 

[enjoyinglife102]

How about suggesting an alternative fee structure? The advisor gets paid 50% of the returns generated in excess of what a simple portfolio of 40% VG Total Stock Market, 20% VG Total International Stock and 40% Total Bond Market produces. I know it's highly unlikely, but in addition if they underperfom that benchmark, they reimburse you for the loss. Surely an all-knowing "investment professional" would have no problem agreeing to that?

Just another example of how the investment industry is one of the biggest rip-offs in America.

 

[F4mandolin]

I switched from EJones about a year ago. If I were you I would leave it right where it is for now and get to reading all you can. Like others said, you can do better with Vanguard or Fidelity. But.....I personally would just leave it where it is for a couple of weeks while you get the reading done. Then call Vanguard etc and see what they say. In the meantime.....don't let EJ do anything with the money. The final straw for me was a big push by EJ to try to get me to buy their variable annuities.....at that point it really really hit me that they didn't have my best interest as the #1 priority. You can check this site and others (like Bogelheads) for more info. If you don't want to get things too complicated....look up info on the lazy portfolio's.

 

[FinanceDude]

How about suggesting an alternative fee structure? The advisor gets paid 50% of the returns generated in excess of what a simple portfolio of 40% VG Total Stock Market, 20% VG Total International Stock and 40% Total Bond Market produces. I know it's highly unlikely, but in addition if they underperfom that benchmark, they reimburse you for the loss. Surely an all-knowing "investment professional" would have no problem agreeing to that?

Maybe the omnipotent FA would agree, but those nice folks at SEC and FINRA would never allow it...........might consider taking the discussion up with them..........