Edward Jones and my remorse

[zaqxsw]

My sister was executor of my parent's estate once my mother died. She rolled everything over to Wells Fargo where she had her husband's inherited money.

When I finally got the account info., I wanted it transferred over to my Fidelity account. When reviewing the investments and history with my Fidelty rep., it became appalling what had been going on.

The same funds Wells Fargo invested in were available with no commissions fees if you wanted to invest in them. Wells Fargo earned almost 5% a year for nothing.

My sister had freaked out during the late 2000's recession and told Wells Fargo to do something. Yep, they pushed a button and earned over 5 figures in commissions for essentially nothing, rebalancing...

It was a crime. I considered legal action but didn't.

I couldn't make myself tell my sister all of this. She has no means to do anything else but use them. She wouldn't have listened anyway, as her husband's father used Wells Fargo.

 

[gooddog]

@zaqxsw - Illustrates the need to take care of our own finances and not hand them over to someone else. At least if a mistake is made, it is honest when doing it yourself.

 

[themillerman]

Edward Jones and my remorse...

I've been with Vanguard since I retired in 2012. Managed my IRA myself until a couple of years ago then I went with the Vanguard advisory service. At 0.3% it's well worth the money.

 

[Yian]

Learned a lot!

In reading the original comment and then reading the responses is a great lesson! Great advice from everyone!!! Didn't know about EJ....Glad we have Fidelity and Schwab, and Vanguard funds...

Wonder if anyone has advice for a 529 plan --- grandkids are in Massachusetts, but I think we can invest anywhere.....seems that they all have fees and their returns aren't great--and it is hard to glean information about their investments.

Thank you!

 

[travelover]

.......... She wouldn't have listened anyway, as her husband's father used Wells Fargo.

That is the hook. They take advantage of people feeling (unfounded) loyalty and a certain amount of complicity. To expose the brokers' bad faith is to condemn the person that hired them in the first place and to place blame for all the wasted fees. It is easier to ignore the thievery and convince yourself that no one could have done it any better.

 

[JeKa]

We're 70 and I have always kinda taken care of the retirement money at Vanguard and our state PEPSICO plan but I don't really know much...I just look at what a fund has done in the last 10 years or so and pick the one with the highest rate of return.

I thought I would just let EJ take over and do a better job. I started with them in 6/22/21...we have three different pots with them...2 Traditional IRAs and a pot of already taxed money.

As of this moment we're making 1.98% on one IRA and 2.78% on the other IRA...the cash is making 1.30%.

When we met with our FA, we told the FA how much risk we can handle...one IRA is HIGH risk, one IRA is MEDIUM risk.

The FA has the cash pot split between 12 different funds. Each IRA has 13 fund holdings. Some of the funds don't have very long track records.

A lot of the funds are income funds...we told him we don't need income from this money, we want growth.

I'd like to transfer the money to another institution and buy ETFs.

Am I right to think we're being mishandled? I know the market has been down the last 6 months and that's how long we've been with EJ so maybe I'm expecting too much but my son and brothers are still making 15-18% this year.

What would you do if you were me? Thanks!

It is not too late. Pull your money from EJ as fast as you can. Go back to Vanguard, Fido, Schwab. Anyone but EJ. I would pay the fee at Vanguard to let them manage my money before I would give EJ another half cent.

 

[jazz4cash]

What is a PEPSICO plan?

 

[Taxman59]

What is a PEPSICO plan?

A COLA pension plan?

 

[mrstop]

My in-laws have a good sum in EJ. I couple of years ago the decided they wanted to start gifting their inheritance early so that they could enjoy seeing the benefits before they pass. They spoke to their EJ advisor who basically told them that "they shouldn't do it, because it wouldn't be appreciated and they would spend it unwisely." My wife, SIL and I were pretty miffed because this was not financial advice, but clearly self-serving to preserve EJ's balance. While it's nice to have the additional funds, the early inheritance wasn't expected and not necessarily needed for our lifestyle. I was shocked (well maybe not) that their trusted INVESTMENT advisor is telling them how to spend their money. My MIL is still continuing to dole out the inheritance, but it is in much smaller annual amounts due to the advice she is being given from EJ.

It's my in-laws money and they are happy with their advisor, Eric, because he's a really nice guy... My MIL is worried constantly about the market and how it is performing. However, she doesn't realize that market performance almost pales in comparison to what she's paying "nice guys Eric and Edward." Unfortunately, they have joined the cult and drunk the Kool Aid of EJ. They have the funds and would be much better served by a fiduciary if they needed hand holding, but it's not something they are willing to hear. Oh well...


TLDR: Stay away from EJ!

 

[mystang52]

...

It's my in-laws money and they are happy with their advisor, Eric, because he's a really nice guy... My MIL is worried constantly about the market and how it is performing......

This likely applies not just to EJ, but so many FA's out there. I had a same-age office friend, at my last job, and we frequently spoke about retirement. At the time, he was in a less secure financial situation. I mentioned my approach (Index funds with Vanguard). At some point he went to one of those free dinner lectures, and on the spot hired the guy. My friend told me the reasons were that he only charged 1%..........and he was comfortable with him because he was a nice guy. As above, it's his money and my friend didn't ask my opinion so I said nothing.

 

[athena53]

They spoke to their EJ advisor who basically told them that "they shouldn't do it, because it wouldn't be appreciated and they would spend it unwisely." My wife, SIL and I were pretty miffed because this was not financial advice, but clearly self-serving to preserve EJ's balance. While it's nice to have the additional funds, the early inheritance wasn't expected and not necessarily needed for our lifestyle. I was shocked (well maybe not) that their trusted INVESTMENT advisor is telling them how to spend their money.

My advisor at UBS started out at EJ. When I called him last year and told him I needed to transfer money to my checking account to replace my car he asked what I was buying. A Honda Civic, I told him. He laughed and said, "Why don't you get a BMW?" (I laughed, too, and asked him why he heck I'd do that.)

I guess he wouldn't have lasted long at EJ.

 

[Stormy Kromer]

I don't disagree with the posts which advocate investing on your own, and I do it myself.

However, my FIL and MIL have had their life savings "invested" at local banks in FDIC insured accounts. They won't consider anything else and won't listen to anyone but their local banker who assures them that their money is "safe and insured".

They would have been far ahead if Fast Eddy had convinced them years ago to invest in a conservative portfolio even with their high fees.

 

[MRG]

I don't disagree with the posts which advocate investing on your own, and I do it myself.

However, my FIL and MIL have had their life savings "invested" at local banks in FDIC insured accounts. They won't consider anything else and won't listen to anyone but their local banker who assures them that their money is "safe and insured".

They would have been far ahead if Fast Eddy had convinced them years ago to invest in a conservative portfolio even with their high fees.

My DS's FIL used the walls of his house. Didn't trust banks. Walls don't even pay interest.

 

[OldShooter]

My DS's FIL used the walls of his house. Didn't trust banks. Walls don't even pay interest.

As a professional megabank trustee and executor, DW and her assistant had a regular routine for searching a deceased beneficiaries' home for stashes. I don't remember all the places, but curtain hems were popular, taped to the back of pictures was another, and the freezer section of the fridge. She always required that her staff have two people on these visits. These were typically women who had experienced the depression.

 

[Stormy Kromer]

As a professional megabank trustee and executor, DW and her assistant had a regular routine for searching a deceased beneficiaries' home for stashes. I don't remember all the places, but curtain hems were popular, taped to the back of pictures was another, and the freezer section of the fridge. She always required that her staff have two people on these visits. These were typically women who had experienced the depression.

Both my Grandmothers were products of the depression. One kept cash in her deep freeze. The other had some in a plastic bag in the toilet tank. Silver coins could be anywhere.

I remember one old lady who said she kept $100 bills in her bible because she knew nobody would be opening that.

My grandpa lost money when the banks closed in the 30's and kept it in a cream can buried in the grove for many years. My dad found it one day when he was a kid and that stopped.

 

[Koolau]

Both my Grandmothers were products of the depression. One kept cash in her deep freeze. The other had some in a plastic bag in the toilet tank. Silver coins could be anywhere.

I remember one old lady who said she kept $100 bills in her bible because she knew nobody would be opening that.

My grandpa lost money when the banks closed in the 30's and kept it in a cream can buried in the grove for many years. My dad found it one day when he was a kid and that stopped.

When DW's mother passed, DW was going through stuff in her house. By luck, she discovered a $20 bill in an old magazine. Several hours later, DW had found (IIRC) almost $2K!

When mom and dad passed, I looked around in their basement as I knew dad used to hide silver coins. Sure enough, I found a bag of (real) silver dollars. YMMV

 

[Yipper]

The Woodlands wasn't a high rent district when we moved here in 1991!



But it is now and that's a good reason for the EJ folks to roost here.



Conroe, Willis and Magnolia are growing like gangbusters too!

Along with a couple of other places in the greater Houston area, The Woodlands definitely was high rent in 1991 when I moved into the (then) new Cochrans Crossing area. [emoji4]

My oldest was born in Conroe even though our tenure in Texas was only about 2 years I still have positive memories due to the friendly people up in Conroe. I don’t even think the small hospital is still there.

On topic - what is the reaction to inside brokers at Merrill Lynch (pre BofA)? My DFIL, his brother and a BIL all swore by this ML guy and I just KNOW they were in loaded MFs and several individual stocks that he liked to trade for decades. I tried to share another option and point of view with them a few times but I was much younger so had no credibility… and just stayed away from the topic for family harmony reasons.

Within 10 miles of my primary residence there are at least 10 EJ offices, a couple of which I walk past regularly… never seems to ever have anyone going in or out. They’re both super small - receptionist desk (rarely occupied) and perhaps an office of conference room behind. Lots of dark paneling is visible.

 

[Koolau]

On topic - what is the reaction to inside brokers at Merrill Lynch (pre BofA)? My DFIL, his brother and a BIL all swore by this ML guy and I just KNOW they were in loaded MFs and several individual stocks that he liked to trade for decades. I tried to share another option and point of view with them a few times but I was much younger so had no credibility… and just stayed away from the topic for family harmony reasons.

Within 10 miles of my primary residence there are at least 10 EJ offices, a couple of which I walk past regularly… never seems to ever have anyone going in or out. They’re both super small - receptionist desk (rarely occupied) and perhaps an office of conference room behind. Lots of dark paneling is visible.

I have heard that folks using loaded funds actually tend to do better than folks with no-load funds (on average.) The reason: Folks tend NOT to trade in and out of their loaded funds due to the potential immediate losses/costs associated with changes. Less trading USUALLY leads to better results overall. Plenty of exceptions (especially in this bunch.)

I certainly don't encourage loaded funds, but sometimes there are good unintended consequences. YMMV

 

[MichaelL]

This thread reminds me of a story. A long time friend asked me for some financial advice. I think that another friend told her that I had some money. She told me that she had a financial advisor who came recommeded who she really liked. I asked her to send me the brokerage statements so that I could get a look at her over all portfolio. I did up a balance sheet for her to look at how much she had in each area, cash, real estate and stock market. It was impossible to track the returns on her market investments as the advisor had her invested in small amounts in so many mutual funds. I also could not calculate the fees given the huge number of funds with small amounts in them. It was just ridiculous trying to add them all up. She was paying the advisor 1% plus the fees for the funds. I talked with the advisor and found that this was the policy of their company to spread the money thin across many mutual funds.

 

[travelover]

........ I talked with the advisor and found that this was the policy of their company to spread the money thin across many mutual funds.

Well, sure. If the investments were in a couple of diversified index funds, it might look simple enough for a person to do themselves. We wouldn't want that!

 

[NoEZmoney]

RUN FORREST!! RUN!!

Years ago I worked with a guy who left our company and got a job as a financial advisor with what was then Shearson-American Express and has since moved to Ameriprise Financial. Nice enough guy although we weren't close, I always thought him to be above-board and basically ethical and honest.

So some time had passed and I bump into him at a business afterhours social gathering hosted by the local chamber of commerce. He hands me his card and invites me to get a "free consultation" for retirement planning. I was in my late 30's and thought it couldn't hurt so why not? Now I had started IRA investing in the mid-1980's with the typical 65/35 mix of stock & bond mutual funds with low fees. Not setting the world on fire but they were pretty much matching the decent market performers. I was slowly getting good returns.

THREE-CARD MONTY WITH LUNCH PROVIDED
We meet at his nice offices and he brings in coffee and lunch...does a Q&A about my current investments, future retirement goals, horizon, visualize what I expect at what age, etc. Then he tells me he'll take my current account info and compare it with his products and tells me his market resources will find "better options" to help me get to FIRE sooner and safer.

A couple of weeks go by and he calls to set up lunch and presents me with this custom 3-ring binder with my name on the front and it has tabbed sections with my goals and wants and needs. Then shows the amount I'll need for FIRE and outlines how to get there with Shearson-AE investment products ONLY. I get a tiny notation disclosing annual administrative and management fees along with a total balance fee based on a percentage of my total accounts and then other "possible fees" for update consultations, etc.

A quick add-up showed me I was looking at paying 3 to 4%+ before paying upfront loads on Shearson-American Express products, no mention of any other product outside their fold.

Keep in mind I had been using no-load / low cost mutual funds performing at decent levels. I then asked for the page that compares my current holdings with Shearson-AE products he was recommending. He sort of froze and said "Well I didn't really find anything that stood out worth mentioning here OR there was very little information on my holdings out there." HUH? What happened to all his "vast data resources on all financial products available" pitch?

I didn't really react but took all this as a well-scripted sales pitch and told him I'd think about it. A week later he called and I told him that I decided to go a different route but thanks for the lunches and binder.

SUMMATION:
Now I don't begrudge someone getting paid for a service but the built-in fees and charges just to have an account were beyond reasonable IMHO. Besides I had enough knowledge to know I could do OK on my own if I do a little reading and listen to enough people who know more than I do on certain things. And considering the fate of Shearson-American Express, I think I did the right thing by declining their portfolio.

I met a fork-lift driver with Ford Motor Co. and he was a high-school dropout who amassed a fortune buying smart and holding. So much in fact that he was one of the largest donors to HBCU's in the U.S. at one time. He donated about $200K to set up a tuition fund for a local school in his hometown, that's how I met him. His advice was the same as I would give you: "Listen to others who know more, take good notes, dollar-cost-average, AND watch your costs/fees."

I'll add that if you feel you need some advice, get with a CFP "Fee-Only" planner and avoid buying anything they get a commission. Today I have mostly Vanguard funds that have done pretty well over time, along with a few other non-VG in the mix that have <1% fees and some have been doing really, really, really well. I'm no expert nor super-smart, I just pay attention to the markets and carefully read my statements.

Good luck.

 

[F.I.R.E User]

I am sad because I will not receive a free Christmas card this year in 15 years.

 

[mhk7]

I worked for the state of Missouri and they called it PEPSICO. The state also matched a certain amount ($25 I think) for retirement funds. One could also invest money from their salary. It was an excellent way to get in the market and get employees interested in saving for retirement.

 

[frayne]

Just wonder what percentage of the investing public uses FAs as opposed to DIY ? I would venture to guess we (DIYers) are in the single digit minority.

 

[SecondCor521]

Just wonder what percentage of the investing public uses FAs as opposed to DIY ? I would venture to guess we (DIYers) are in the single digit minority.

I volunteer for AARP Foundation Tax Aide. Most clients don't have investments and generally have incomes in the $20K to $30K range. Of the ones who do have investments, almost all have an FA. All the ones with FAs have 10-12 positions, often several trades, and generally speaking much less than 50% of their dividends are qualified. The one client I can recall from last season who did not have an FA was a day/swing trader who had dozens of trades and IIRC a net loss for the year (2020) of tens of thousands of dollars. We are not allowed to give investment advice, of course, but occasionally if the client seems interested I'll point out that qualified dividends are generally treated better tax-wise than ordinary dividends.

My Dad lives in a fairly posh CCRC. Of the people there whose situations I know, which are few, nobody I know trades, and almost everybody owns boring stocks, mutual funds, CDs, and savings accounts. Most are well educated, and with the exception of one mesothelioma lawsuit person, I think they all got there the same way most here did - working, earning, saving, investing.