Help with Firing FA

[Idnar7]

When I retired I went with a FA who had been doing well for my wife who retired in 2008. I thought I would try it for a year and now it has been three. Due to poor performance and egregiously high fees (1.5% - 2.00%) the FA firm is taking 1/3 of what my nest egg is producing. I worked 31 years for accumulating my nest egg and I want my money working for ME not my FA. I intend to go with Fidelity and DIY.

What gives me pause is this is my life's savings. Is there any concern with asking Fidelity to do this transaction? Are there any safeguards to follow? - in writing from Fidelity beforehand?, legal representation?, be there in person when the transaction is done? There is a brick-and-mortar Fidelity office close to my home. As I have known this FA for five years I don't want to give them a chance to talk me out of it. They know I am very unhappy and want to meet with me. I want to use Fidelity to make a clean break.

Maybe I am worrying about nothing here but would like to hear from others that have broken free and if the process went smoothly. I assume Fidelity is doing these type transactions all the time. Just would like some real feedback.

TIA

 

[Midpack]

If it helps, I moved my entire portfolio from Fidelity to Vanguard about 10 years ago, and it was completely painless. As you might imagine, Vanguard made sure everything went off without a hitch - the last thing they want is to disappoint a new customer right off the bat.

And Fidelity called or emailed once (don't remember) and asked if there was anything they could do to change my mind, but they didn't pester me at all. I didn't have to do anything after giving Vanguard the info they needed (if there are any holdings that can't be transferred in kind and have to be liquidated, they will bring them to your attention, so you can decide what you want done).

I am sure Fidelity will make it just as painless for you as Vanguard did for me. They've done it thousands if not millions of times. Your FA may ask you to confirm before cooperating with Fidelity (not a bad thing), beyond that you don't have to discuss your move with the FA at all. If he/she wants to discuss, I'd keep coming back to his/her outrageous fees. Millions of DIY investors are successful without paying high fees. That's your call...

And I have nothing against Fidelity BTW, Vanguard just became a better fit for us. Both firms have their merits IMO.

 

[Dawg52]

The transition s/b a piece of cake. I have been with Fidelity for a very long time but I have moved some money to them from a small brokerage firm that I also used and there was nothing to it. Just did it online.

Fidelity is there to help you anyway you want. I have a rep assigned to me that I talk to 2-3 time a year. He just touches base to see if I am happy and if I need anything. No pressure from him at all. And I can call him anytime I want.

Good luck with the change. You should have no problems working with Fidelity.

 

[marko]

Any of the reputable houses (Fido, TRP, etc) will make the transition for you. You just give them the account info and they do the rest.

Because our earlier FA was a friend of a friend, we felt uncomfortable in calling him up and 'firing' him. Instead we just walked away and never saw him again...TRP did all the legwork.

 

[Sarah in SC]

You can get the new accounts opened at the firm of your choosing and then have them process the transfers from that end. They will (back office) contact the existing custodian and arrange the transfer.

If you like, it is considered appropriate to send a short email to the person who has handled your accounts that simply says that you appreciate his assistance but that you are changing custodians and they will be arranging the transfers.

And that's it. Your new custodian will take care of all the details. It does sometimes take 2 cycles to get dividends moved, so if after 2 months you've still got some stuff showing on your old statements, get in touch with your new custodian and tell them to do a sweep request.

 

[Midpack]

It does sometimes take 2 cycles to get dividends moved, so if after 2 months you've still got some stuff showing on your old statements, get in touch with your new custodian and tell them to do a sweep request.

Important point. Vanguard did three sweeps on all our accounts automatically, we didn't even have to request it. I suspect Fidelity does too, but certainly something the OP would want to know/ask. It would be a nuisance for all concerned if some relatively trivial $ amount gets left behind.

 

[Idnar7]

Thanks for all the quick feedback. I feel much more comfortable now.

 

[NoMoreJob]

As others have said, moving the funds should be a piece of cake. I had a friend in a similar situation a few years ago. Once he grasped what his 'advisor' in cooperation with his CPA was doing to him he called me in a panic. I guided him to Vanguard which handled the transaction for him with no problems. He has since passed away but his wife still mentions how happy she is about it.

I highly recommend Vanguard for your investments and the Bogleheads site for DIY investing information, feedback and advice.

Bogleheads • Index page

 

[haha]

You do want to do any taxable account transfers as Transfers in Kind. If something gets sold, you are creating a taxable event. As to IRAs, etc, if there are high cost or proprietary funds in the old account, you can sell them or not as you wish, provided that they will transfer to Fidelity.

Fidelity charges $49.95 for no load fund purchases of any size. unless they are Fidelity Funds or listed in their list of no fee funds. Usually, funds other than Fidelity on this list will have 12b-1 fees. If I am planning a reasonably large purchase, I prefer to pay the up front commission. Even brokers have to make a little spare change somewhere.

Fidelity has no commission or fees to exit a fund, unless there is a short term holding fee which will be clearly disclosed.

If you have or will have a larger account, talk to your Private Client Rep and he will shepherd the transfers through safely for you. These accounts are just like having a full service broker, except someone is always there,. 24-7 to answer the phone, and no one is giving you a big hustle. Though Fidelity is verrry happy to accommodate frequent traders if that is your thing.

Ha

 

[Rustward]

This is slightly off topic and Monday morning quarterbacking, but it is worth saying, but too late to help the OP.

The time to understand investing, handling savings, etc. is long before retiring. Whether you DIY or use a paid professional, it is best to learn how things work with some token investment amount -- not your life savings.

Just have whatever brokerage you are moving to handle the transfer and it should go smoothly. And, as was mentioned, be sure to not create any unintended taxable events.

 

[Singletrack]

In the way of reassurance, I did exactly what you are contemplating about two months ago. I moved our entire entire relationship from MorganStanley to Fidelity. I actually did a good bit of it online, since I already had a small Fidelity account. It takes a few "sweeps" to get all of the trailing dividends moved over but, so far, it has been painless. If you have a lot of individual securities, you might want to inquire and make sure that your cost basis and acquisition date move over to Fidelity (i.e., for ease of future gain/loss tracking).

Just do it....I found it to be liberating...

 

[2B]

You do want to do any taxable account transfers as Transfers in Kind. If something gets sold, you are creating a taxable event. As to IRAs, etc, if there are high cost or proprietary funds in the old account, you can sell them or not as you wish, provided that they will transfer to Fidelity.

Unless things have changed, most proprietary funds will not transfer. They try to use this as leverage to get you to not move. They must be liquidated which is probably a good thing.

When I was at ML I got sold one of their "wonderful" proprietary funds. It was the dog of dogs. After I left ML I found out that these funds were the final resting places of leftover shares of IPOs. They never had to worry about moving the IPO with the proprietary fund sitting there.

To the OP, you can expect one or more calls to have the move stopped. The more the account size the more effort they will put into keeping you. I haven't heard of it lately but many years ago it was not unusual for this transfer to be delayed. Paperwork (which was still paper) would get "lost."

 

[Rustward]

To the OP, you can expect one or more calls to have the move stopped. The more the account size the more effort they will put into keeping you. I haven't heard of it lately but many years ago it was not unusual for this transfer to be delayed. Paperwork (which was still paper) would get "lost."

The OP does not have to answer those calls if they are made. I can't imagine a major brokerage "losing" the paperwork on purpose. They are aware that they have to comply. Having said that, the OP can expect to pay some account closing fees and some per-item transfer fees, and if anything has to be liquidated, some trading fees.

 

[nwsteve]

I can pass along the very recent experience of a friend who spend a fair bit of time deciding to go to Fidelity. When we last met he was asking what I knew about Fidelity. Since I have been with Fidelity (also Vanguard) a very long time, I shared my experiences with him. Since he is more of a trader and looking for an Intl Desk, he needed more than an average custodian. One of the main reasons he was looking at Fido was his frustration with Schwabs' Intl desk which he characterized as rep roulette, and usually having reps who did not know the basics of the transaction he was trying to complete.
I put him in touch with my Private Client Rep who is always happy to get referrals. She covered all the bases with him and connected him to the Fido Intl Desk. He later told me that his conversations there was so far beyond what he been getting from Schwab he could not believe they were in the same business. He was also blown away by having the option of having a committed CFP always available.
He is starting with moving his DW's teacher's 403b money but expects to do more as he validates his first impressions.
Yes, Vanguard is lower cost but I have never had support from them like I have gotten from Fido over the many years.
Good luck with your transfer--wait no longer.
Nwsteve

 

[NoMoreJob]

I can pass along the very recent experience of a friend who spend a fair bit of time deciding to go to Fidelity. When we last met he was asking what I knew about Fidelity. Since I have been with Fidelity (also Vanguard) a very long time, I shared my experiences with him. Since he is more of a trader and looking for an Intl Desk, he needed more than an average custodian. One of the main reasons he was looking at Fido was his frustration with Schwabs' Intl desk which he characterized as rep roulette, and usually having reps who did not know the basics of the transaction he was trying to complete.
I put him in touch with my Private Client Rep who is always happy to get referrals. She covered all the bases with him and connected him to the Fido Intl Desk. He later told me that his conversations there was so far beyond what he been getting from Schwab he could not believe they were in the same business. He was also blown away by having the option of having a committed CFP always available.
He is starting with moving his DW's teacher's 403b money but expects to do more as he validates his first impressions.
Yes, Vanguard is lower cost but I have never had support from them like I have gotten from Fido over the many years.
Good luck with your transfer--wait no longer.
Nwsteve

Good advice. It depends on what one is looking for. I am not a trader. As a matter of fact I own no individual securities (got that out of my system a long time ago). I own a very few well diversified mutual funds and call it a day.

For a brokerage account - especially if you're an active trader - go with Fidelity. For low cost (primarily index) mutual funds that will be purchased and held according to a long-term plan and occasionally re-balanced - go with Vanguard. I do the latter and typically have no reason to ever talk to a rep. The exception would be when I began doing Roth conversions a couple of years ago - I had to call to re-characterize a couple of small amounts to get my taxes just right.

 

[Ready]

I transferred most of my funds from Fidelity to Vanguard last year. I was assigned a financial advisor who is available any time I have questions. I have done several financial plans with him and found him to be very helpful. He confirmed my decisions to invest in index funds with extremely low fees, like the Vanguard Domestic Index Fund and Vanguard International Index Fund.

And most importantly, I never paid a cent for his services. They were provided free of charge for maintaining a minimum balance with Vanguard. I'm amazed at people who pay 1% or greater of their net worth each year for something available completely free at Vanguard. I believe the minimum you need to have to access these services is $500K, so a relatively modest minimum threshold.

 

[45th Birthday]

As others have said, moving the funds should be a piece of cake. I had a friend in a similar situation a few years ago. Once he grasped what his 'advisor' in cooperation with his CPA was doing to him he called me in a panic. I guided him to Vanguard which handled the transaction for him with no problems. He has since passed away but his wife still mentions how happy she is about it.

I highly recommend Vanguard for your investments and the Bogleheads site for DIY investing information, feedback and advice.

Bogleheads • Index page

I must disagree. Vanguard's web site and tools are mediocre at best. I have had almost $4 million with them for years and I have had several "representatives," the last two of which have never contacted me.

Recently, I wanted to change dividends from reinvest to sweep into a money market fund. They wouldn't allow this because at the time the money market fund had a $0 balance. I kid you not, they made me buy $1 of the money market fund before I could change the way dividends are paid. VERY customer-unfriendly.

I should be more clear. My last Vanguard "representative" (and I do mean my last) did contact me to say, "I wanted to follow up with you and assure you that we work very hard to be as client centric as possible. Our goal as a firm is to provide you with the tools to be the most successful investor possible." To that I say, "Bu11sh!t."

To the OP, as the others have said, open your accounts at Fidelity online and initiate the transfers that way. It will be painless. I have some money (less than $1 million) at Fidelity and they are pretty good. When it makes sense, they will get my Vanguard money and also a much larger amount that I will keep with my traditional broker until my FA retires in a few years. We go way back and I get very discounted fees and special services.

 

[scrinch]

Idnar, by all means go in to the Fidelity office near your house to discuss the process. I had the same misgivings when I went through the same process seven years ago (with Vanguard). As others have said, it is an efficient, painless process, but it hurts nothing to go talk to someone who can explain the process and give you a face to associate with Fidelity.

 

[tinlizzy]

I'll tell you my experience. My taxable acct. was with Scottrade (whom I really like BTW) and even though I'm a wonderful stock picker (who isn't in a bull market!) I decided to end the delusional thinking and move the money into index funds at VG.

VG initiated a transfer in kind but Scottrade put a hold on the transfer until I contacted them directly and then didn't even tell me! The VG rep who was in charge of the transfer called and informed me of the hold. She then suggested we call Scottrade together and we did. The phone rang and I barely got out the beginning of hello and she took over the call. It was a good thing. The Scottrade representative knew exactly what to say to make me pause and she knew exactly what to say as a response. I probably would have reconsidered and allowed myself more time to be indecisive.

In the end I got to say one word, yes, to the question of whether I wanted the transfer to proceed.

Expect a possible transfer fee. Scottrade's was $75 which chapped me.

 

[Another Reader]

Agree with 45th Birthday. Vanguard's website is clunky, and their rules are just archaic and silly. Service is fair to poor. Had a huge problem with Fido over a lost beneficiary form, and moved everything to Schwab and T Rowe a number of years ago. Both easy to deal with, no problems. However, in the end, Fido has the best offerings, most helpful website, and now the best selection of commission free ETF's. A long as I stay OUT of their retail offices and do everything myself on-line, I prefer Fido.

I moved my 457 money to T Rowe and never talked to the annuity selling excuse for an advisor that Prudential offered employees. He would try to sell annuities to retiring folks that saved a bit in the 457 plan but had good pensions on the "replace your paycheck" principle. T Rowe handled the entire transaction.

 

[samclem]

I never had any problems with Vanguard's web site, I've been with them for 25 years. I'm not a frequent trader, I don't need any handholding, and I'm happy there.

 

[Midpack]

I never had any problems with Vanguard's web site, I've been with them for 25 years. I'm not a frequent trader, I don't need any handholding, and I'm happy there.

+1, and I am completely happy with Vanguard too (about 10 years with them), but I am a full on DIY investor.

But IME Vanguard's tools are mediocre at best **, and their reps are less than knowledgeable/helpful outside the most basic asset allocations and generic questions (you won't get much more than the info you find online anyway). The few times I have asked questions (not basic, but not that esoteric either), no rep has ever had an answer, had to get back to me, and the "answer" was pretty useless.

For DIY investors OR folks who are willing to just follow Vanguard's recommendations without a lot of questions, Vanguard is great. For people who need a lot of handholding, I'd think Vanguard would be very limited. And handholding is not free, you should expect to pay (fees) for that kind of service.

** I was with Fidelity for more than 10 years before Vanguard, and their tools were much better even way back then! Fidelity reps sold harder than Vanguard, but most weren't that knowledgeable at Fidelity either vs Vanguard IME.

 

[Ready]

I have been with Fidelity for over 20 years, and have generally been very happy with them. However, about 18 months ago I asked to speak with a financial advisor who I was supposed to have free access to due to having a minimum amount invested to be entitled to this service. I ended up scheduling about four sessions with him, each going for about 45 minutes. I found the guy to be friendly enough, but he would pontificate endlessly about a lot of nothing and gave me no real advice. On the fourth session, he introduced me to Portfolio Advisory Services, where they offered to manage my investment for me for a fee of about 1.35%.

It was on that session that I really started to feel like I was being slimed. The guy was very slick and fast talking. He said he would manage my money based on tax efficiency, which included buying and selling funds on average once every nine months. Looking back, I have no idea how he was going to save me on taxes by generating so many buy/sell transactions, which would ultimately create excessive capital gains. Maybe he was planning on making some really bad decisions, and generating capital losses? That would have saved me on my taxes...I guess.

It was after that experience that I began reading more about index investing, and ultimately ended up with Vanguard. In reality, I could have easily stayed with Fidelity and purchased their low cost index funds. The only reason I did not is nobody at Fidelity ever mentioned them to me or suggested I consider them. So ultimately, that cost them most of my business.

In reading about other people's experiences, it seems clear that our views toward brokerage firms can be formed almost exclusively from the experience of one or two people who we interacted with at these firms. So of course we are going to see a wide variation in satisfaction levels here. I'm sure both firms have some great people, and some mediocre ones. The key is to rely more on the advice given by the members of this forum, the Bogleheads forum, or other forums that you find useful. And use the reps at these firms for mostly administrative functions, and not so much for expecting useful advice.

 

[Idnar7]

Thanks for all the responses. I went to the Fidelity office today and they are going to initiate the transfer next week. I sent an e-mail to my former FA. Initially I am going to transfer everything into NTF ETF's and then transfer into funds at a later time. I am not a complete newbie as I have managed my taxable and Roth accounts for the last 7 years.

They asked me about transferring in kind. If they did that, would they charge you per fund because they are not funds they offer NTF? I was just planning on starting from scratch. If I could get them T-I-K at no fee, I would consider that. As one poster replied this feels very liberating!!

 

[Singletrack]

Congratulations on making the leap to Fidelity....I don't think you'll regret it!