Transferred IRA with Regrets

[UnrealizedPotential]

There is also something I should add.

I have 529 plans with EJ now, that I started up two years ago. I plan to transfer those also.

However, I was going to put $700 in them, while they were still at EJ, this month. I asked my adviser if there is a transfer fee. I thought, there's probably a small one.

Well guess what? The "fee" to transfer $700 into my 529 plans, would be $90. Ninety dollars. No, I'm not making this up. He got his calculator out and told me that's what it would cost. So I'll hang on to that $700 and wait until I set up new 529 plans with Vanguard, to transfer the money.

Just to add money to the 529 plans. And I already paid a hefty loading fee when I opened these up two years ago.

So when I say, I can't see this business surviving into the next decade, this is why.

Out of that $90, how much does the advisor get? If it's something you can do in time, you really need to learn more about investing, so you can do it yourself instead of paying someone who you works with YOUR money and you are not even sure if he has your best interests in mind or just his pocketbook. It will really pay off for you in the long run if you can learn to do it all yourself.

 

[OldShooter]

https://www.irs.gov/pub/irs-pdf/p970.pdf will get you the relevant IRS publication. Rollovers are discussed on page 60. Riffing on @UnrealizedPotential's point, it looks like you can simply take the account balance as a distribution and move it without penalty to another custodian as long as the process doesn't take more than 60 days. Hopefully Fast Eddie won't charge you a fee to withdraw your own money.

 

[Investornew]

Re your 529 plans, can you not buy index ETFs or Vanguard funds? That will keep Eddies paws off your money once the transaction fee is paid. Don't let them put you into funds with 12b-1 fees or loads of any kind.

Re continuing in business I have read that the new fiduciary rule is expected to hurt them significantly. Expect them, though, to follow the letter of the fiduciary rule, which applies only to retirement funds, and continue to rape and pillage cash accounts and things like 529s. I also read that they plan to ask clients to sign some kind of disclaimer that will let them off the fiduciary hook. True or not, I don't know.

I had already set up these 529 plans in EJ, with Blackrock. It's probably too late to do much with them - I just need to move them out of EJ and would like to put them into Vanguard's 529 plan. I paid a load fee in the 529 plans already, a front load, they put me in the class A stuff.

Yes, it's unethical (in my opinion), although not illegal of course, for them to charge me $90 to put $700 into my 529 plans. I am disgusted by that. My EJ adviser said "that's standard across the industry". No, it's not. He's so slick!

And I think it's shady if they're asking people to sign those disclaimers.

 

[Investornew]

https://www.irs.gov/pub/irs-pdf/p970.pdfHopefully Fast Eddie won't charge you a fee to withdraw your own money.

They do charge a fee. I will gladly pay it to be rid of them.

 

[Investornew]

Finally, be sure you understand the difference between Series 7 licensed brokers and Series 65/66 Registered Investment Advisors (fiduciaries) and understand which type you are dealing with. With the new fiduciary standard law, this will b slightly less of a concern, but IMO a tiger can't change his stripes overnight no matter how much the Feds would like him to. So I would still recommend RIAs over guys with vanilla Series 7 licenses.

I am not sure. Are EJ Advisors a series 7 or series 65/66? I will have to find out.

 

[bw5972]

There is also something I should add.

I have 529 plans with EJ now, that I started up two years ago. I plan to transfer those also.

However, I was going to put $700 in them, while they were still at EJ, this month. I asked my adviser if there is a transfer fee. I thought, there's probably a small one.

Well guess what? The "fee" to transfer $700 into my 529 plans, would be $90. Ninety dollars. No, I'm not making this up. He got his calculator out and told me that's what it would cost. So I'll hang on to that $700 and wait until I set up new 529 plans with Vanguard, to transfer the money.

Just to add money to the 529 plans. And I already paid a hefty loading fee when I opened these up two years ago.

So when I say, I can't see this business surviving into the next decade, this is why.

$90 on a $700 seems excessively high. Here is the record of a transaction I did earlier this year. As I only have experience with my current brokerage (over 20 years), is this inline with fees out there in general?

Transaction History: Transaction Records


Order Type: Bought
Trade date: 03/06/2017
Settlement date: 03/07/2017
Security: VFWIX
Quantity: 2,710
Price: $18.45
Commission & Fees: $19.99
Amount: $50,019.99
Description: VANGUARD FTSE ALL-WLD

 

[redduck]

... As I only have experience with my current brokerage (over 20 years), is this inline with fees out there in general?

Transaction History: Transaction Records


Order Type: Bought
Trade date: 03/06/2017
Settlement date: 03/07/2017
Security: VFWIX
Quantity: 2,710
Price: $18.45
Commission & Fees: $19.99
Amount: $50,019.99
Description: VANGUARD FTSE ALL-WLD

Yeah, you did fine, $19.99 is quite reasonable. Some thoughts...

1. You have VFWIX which is Investor Shares with .22% expense ratio.

2. You bought over $50,000 worth of shares which would entitle you to Admiral class which has .11% expense ratio (but, I think you can only have Admiral class if you are with Vanguard).

3. If you wanted, you could have bought VEU which is Vanguard's ETF for VFWIX. VEU has an expense ratio of .11% The commission to buy would have been whatever your brokerage charges to buy a stock (which should be lower than whatever it costs to buy a mutual fund).

 

[bw5972]

Yeah, you did fine, $19.99 is quite reasonable. Some thoughts...

1. You have VFWIX which is Investor Shares with .22% expense ratio.

2. You bought over $50,000 worth of shares which would entitle you to Admiral class which has .11% expense ratio (but, I think you can only have Admiral class if you are with Vanguard).

3. If you wanted, you could have bought VEU which is Vanguard's ETF for VFWIX. VEU has an expense ratio of .11% The commission to buy would have been whatever your brokerage charges to buy a stock (which should be lower than whatever it costs to buy a mutual fund).

I pulled that from history of a transaction I entered myself. About a week later,
my financial advisor (no cost), called me and pointed out that the Admiral class funds did not appear as a selection in the online app but that they could be purchased by calling him to get an order done thru their trading desk. He than offered to have this and all my other Vangard purchases converted to Admiral shares at no cost, (VFWAX) in this one case. I said go ahead and 24 hours later it was done.

If you look back at my previous post in this thread, you can see the Vangard funds I currently have.

 

[redduck]

^^^
Very well done!

 

[bw5972]

^^^
Very well done!

Thanks! I guess most people assume you must have a Vangard account to own Vangard funds. Not true, even for Admiral class shares.

 

[redduck]

If anyone else here has transferred your IRA, how did the transfer process go?

Over the years I've transferred into Vanguard, Scottrade, Schwab and Fidelity. The only one I had any problems with was Fidelity and that was because the person I was working with had four days on the job. But, we muddled through and she kept me up to date on the progress of the transfer. This was also the only time I did a transfer face-to-face. I think there's an advantage to transferring online while having the transfer rep. on the phone. They walk you through each step. They do this stuff all day long. They are good at what they do.

So, I would call Vanguard ( or whomever) and ask for some "hand-holding" (that's how I say it). Have your last statement in front of you (or to the side); have your driver's license with you. Also make sure you let them know if you have any "weird" stuff in your portfolio (anything other than simple etf's, mutual funds, stocks). The rep should be able to tell you the best way to transfer the weird stuff (or, at least what to do with it) if Vanguard (or whomever) can't accept it. The rep. may have to ask his supervisor re: guidance as per specific investments you have and may need to call you back. That's OK, they just want to get it right.

Now, in a post of yours you said you felt like a number--you are a number (Vanguard has 20 million clients, give or take 7 or 8). Number or not, they have always been courteous to me (as have Fidelity, Scottrade, and Schwab). One really neat thing, out of 20 million (give or take 7 or 8) Vanguard told me that if I promise to close my account with them in the next three months, my number would be retired. I am mulling over their offer.

 

[MRG]

I am not sure. Are EJ Advisors a series 7 or series 65/66? I will have to find out.

It doesn't matter. Even if they have the license they are not working as Your fiduciary. They are a fiduciary for someone, Jones or themselves.

 

[Investornew]

$90 on a $700 seems excessively high. Here is the record of a transaction I did earlier this year. As I only have experience with my current brokerage (over 20 years), is this inline with fees out there in general?

Transaction History: Transaction Records


Order Type: Bought
Trade date: 03/06/2017
Settlement date: 03/07/2017
Security: VFWIX
Quantity: 2,710
Price: $18.45
Commission & Fees: $19.99
Amount: $50,019.99
Description: VANGUARD FTSE ALL-WLD

So your transaction fee was very miniscule compared to what Edward Jones is trying to rip me off for. I can't even refer to it as anything else but a rip off. That's why I'm kicking EJ to the curb.

Like I said earlier, I don't see how EJ's business model can survive in the next decade. They have already been hit with a couple class action lawsuits over their fees and fiduciary wrongdoings. I can't see how they get any customers. People must be leaving them in droves.

 

[bingybear]

So your transaction fee was very miniscule compared to what Edward Jones is trying to rip me off for. I can't even refer to it as anything else but a rip off. That's why I'm kicking EJ to the curb.

Like I said earlier, I don't see how EJ's business model can survive in the next decade. They have already been hit with a couple class action lawsuits over their fees and fiduciary wrongdoings. I can't see how they get any customers. People must be leaving them in droves.

You noted (I think) that you were going to pull your DJ 529 and open one at Vanguard. When I opened a 529 I first looked at the plans, not necessarily the company running them. At that time there were differences between states... in fact most had different plans. Buying into my state's plan offered some state tax deductions where buying another state's plan would not. Some states would allow the contributions to purchase tuition credits so you could lock in tuition rates. I guess the point, I would not buy a 529 just because broker A is the defined broker.
The plan I bought used Vanguard as the broker. However, if purchased thru a financial adviser, then you had high fees like you are describing. At the time I bought my 529 one could not buy it direct from Vanguard. However, the state had a website where you could get an account and fund it... or you could do the same by mailing in forms and checks.

Your $90 transfer fee seem quite high especially with an account that has $700 in it. However, when you move account from a broker they usually do charge a $50 to $110 fee for closing an account. Usually this is seen on moving IRAs or larger investment accounts. When I've moved larger account, the receiving firm added the fee back to the account. I've never moved a small 529.
I think you need to sort out what you want to do before jumping to another place. It sounds like you may not have read about all the fees with you EJ accounts. Understand your options and fees before doing anything. Figure out what state plan is best for you. Vanguard administers several plans. But if tax advantages would be useful to you, Vanguard's plans not be the best if they don't administer your state's plan.
Learn before you jump.

 

[Investornew]

Your $90 transfer fee seem quite high especially with an account that has $700 in it. .

I have two 529 plans with over 4K in each one now. I just wanted to deposit $350 in each one (total of $700). The FA said that it would cost $45 transaction fee for each one, which would be $90.

My state Texas offers no state tax deduction to enroll in a 529 plan here, so I'm opening myself up to other states plans.

I am looking now at Utah Educational Savings Plan and the Vanguard 529 plan out of Nevada. (Both are Clark Howard favorites on their "honor roll" listing of college savings plans). If you have any recommendations, let me know. I am going to learn before I jump into something this time. I won't make the same mistake again with purchasing through a financial adviser.

I know many people who work for EJ and they're always descending on us like vultures - basically won't leave us alone. Some of them go to my church. So after I pull my investments out, I know I'm going to be harassed to get back in. I just wish they would leave me alone. Worst thing is, they know my mom died recently and that I've inherited some money.

 

[OldShooter]

I am not sure. Are EJ Advisors a series 7 or series 65/66? I will have to find out.

I'll bet a McDonald's hamburger against a Ruth's Chris steak that they are plain vanilla Series 7. You don't have to ask. Go here: https://brokercheck.finra.org/

It doesn't matter. Even if they have the license they are not working as Your fiduciary. They are a fiduciary for someone, Jones or themselves.

Actually it can matter quite a bit. If an advisor is legally a fiduciary and does not act in the best interests of the client, he/she is open to legal liability and to FINRA (https://www.finra.org/about) discipline, which can include loss of license and being banned from working in the industry.

Series 7 licensees are held to a much lower "suitability" standard. For example, if there are two mutual funds that are suitable for the client, the broker is permitted to choose the one that pays him more (think "load") despite the fact that it disadvantages the client and thus the purchase is not in the client's best interest.

The current fuss about the "fiduciary standard" has an arcane little twist: DOL can only regulate brokers in connection with retirement accounts. So, effective June 1, all brokers dealing with retirement accounts are held to the fiduciary standard. BUT non-retirement accounts are still fair game for the slimeballs. So, caveat emptor still applies.