Edward Jones take on index funds...

[Ready]

Fidelity has a local office about ten miles from my house where you can meet in person with an advisor if you wish. And it is possible to buy their Spartan index funds with fees about the same as Vanguard.

However, if you know nothing about investing and rely on one of their local office people, I wonder if they would advise to you go with index funds, or a bunch of their actively managed funds. I've never explored it because I have no interest in talking to them in person. It would be an interesting experiment.

My guess is they would look for ways to make more money than their low cost index funds alone, but would not rip you off nearly as badly as EJ would.

 

[jjquantz]

Fidelity has a local office about ten miles from my house where you can meet in person with an advisor if you wish. And it is possible to buy their Spartan index funds with fees about the same as Vanguard.

However, if you know nothing about investing and rely on one of their local office people, I wonder if they would advise to you go with index funds, or a bunch of their actively managed funds. I've never explored it because I have no interest in talking to them in person. It would be an interesting experiment.

My guess is they would look for ways to make more money than their low cost index funds alone, but would not rip you off nearly as badly as EJ would.

I can tell you that, at least at this local office, they will steer you to a bunch of higher fee funds. I went in a few years ago and they created a set of recommendations for me. The portfolio was probably worth about $300K at that time and their suggested list must have had 30 different funds - none of them index, all of them with higher expense ratios. Needless to say, I didn't follow their advice. At least they didn't push to actively manage my account for an additional percentage.

 

[uofmbish]

Perhaps I am missing something, but I don't see the issue here. If anything, it looks like the OP is just confusing indices with index funds. It all looks accurate to me, and a big part of my job is selecting appropriate indices for institutional investors... Just my 2 cents.

Would it be better if the article was discussing how to construct an appropriate index for your particular investment mix, instead of basically saying, its too hard to do, so don't bother? Sure, but that seems a bit farfetched to cover in a 1-2 page "report" like this, especially when considering the degree of financial knowledge of the clientele audience this was intended for.

Before I am accused of being biased, I think my Dad's Ed Jones advisor should be in jail for having a 65 year old retired man 100% in equities in 2008. Plenty of lower hanging fruit to grill them on than this IMO.

 

[hnzw_rui]

Perhaps I am missing something, but I don't see the issue here. If anything, it looks like the OP is just confusing indices with index funds. It all looks accurate to me, and a big part of my job is selecting appropriate indices for institutional investors... Just my 2 cents.

Would it be better if the article was discussing how to construct an appropriate index for your particular investment mix, instead of basically saying, its too hard to do, so don't bother? Sure, but that seems a bit farfetched to cover in a 1-2 page "report" like this, especially when considering the degree of financial knowledge of the clientele audience this was intended for.

I think one problem with the article is it equates to or at least implies indices and index funds are the same and only stock-based indices at that (primarily the S&P 500). The article makes it seem as if index investing is bad due to lack of diversity and risk management when you can easily get the benefits of diversification by investing in different index funds.

As someone has mentioned it's not so much the factual content, it's the way they were spinned that's quite crafty. Someone receiving that explanation and has limited or no investing know-how will probably happily accept 1-2% in EJ advisor fees as well as a portfolio of high ER funds that perform poorly compared to a similar stock/bond allocation using index funds.