Edward Jones and my remorse

[kgtest]

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.

You make a solid observation. A lot of my friends now approaching there 40s have mentioned that they are in those Target Date 2030 2035 etc funds that they pay fees to have managed through employer 401k. Many don't bother to even rollover when they get new employers and IMHO leave a lot on the table with lower returns and higher fees. Even my highly respected and credentialed FIL who ended his career high on the ladder rung mentioned to me that he simply isn't interested in investing and therefore wouldn't ever bother knowing he is only 'good' with things he is interested in.

 

[OldShooter]

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 think you're right.

Long story short, the Adult-Ed director for our large metro school district asked me to teach an investment course. His problem was that the few financial and legal volunteer teachers he had were teaching to find prospective customers, not just to inform.

I turned him down. Too much work to develop, I'm retired, ... Lots of defendable reasons. Easy, peasy, as people seem to say around here.

About a year later I discovered that a dear but financially naïve friend had been sold "four or five" annuities by some shark at Fast Eddie. That discovery changed my mind on teaching a course, which I have now been doing for several years. My goal is to help protect as many people as possible from the hucksters, hustlers, and sharks out there.

Guys (and gals), there is a lot of energy and expertise in this thread. Please consider contacting your local adult-ed programs and volunteering to teach. My course is three, two-hour, sessions but even a one hour class covering the pitfalls might suffice protect a few people. You'll feel good about it.

 

[frayne]

Even my highly respected and credentialed FIL who ended his career high on the ladder rung mentioned to me that he simply isn't interested in investing and therefore wouldn't ever bother knowing he is only 'good' with things he is interested in.

There is quite a bit of that, that goes around. Many of my retired friends from careers in engineering, law, sales, banking, insurance, etc., just have no inclination or desire to manage their own portfolios and are happy to pay for that service.

 

[PatrickA5]

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.

I met with an Ameriprise gal back in my early 30's. She spent the majority of her time trying to recruit me to work under her. Thankfully, I declined.

When I worked my retirement gig at H&R Block, we had an Ameriprise lady that was assigned to our district. From time-to-time, she'd come into the office to hand out cards and chat with the tax preparers. She was pretty smart and was also a CFP, but I was pretty shocked at her lack of tax knowledge. I'm sure she wasn't supposed to provide tax advice to her clients, but she basically had no understanding of how the investments she was selling were taxed. I trained her as best I could.

 

[rothlev]

I met with an Ameriprise gal back in my early 30's. She spent the majority of her time trying to recruit me to work under her. Thankfully, I declined.

When I worked my retirement gig at H&R Block, we had an Ameriprise lady that was assigned to our district. From time-to-time, she'd come into the office to hand out cards and chat with the tax preparers. She was pretty smart and was also a CFP, but I was pretty shocked at her lack of tax knowledge. I'm sure she wasn't supposed to provide tax advice to her clients, but she basically had no understanding of how the investments she was selling were taxed. I trained her as best I could.

I work for HR Block, one client I had last year was also a client of one of those firms, she was 60, small amount of w2 income, we live in Georgia, health insurance from the marketplace, he did roth conversions, to the tune of 50k, she did not have any idea what the 1099 r was about or what had happened to the money, ( she had to call and ask him ). churning resulted in another 50k of capital gains income. everything was taxable to Georgia as she was under 62 when the retirement tax break kicks in. Her subsidy from the marketplace would have been gone ( and could have cost her another 10k) except for a last minute COVID change in the code forgiving repayment of her subsidy. She was not happy, nor was I. she had him call me, he had 0 idea of the ramifications of everything he was doing for her.

I had to tell him do not sell ( excepting for losses ) and do not convert until she is at age 62 and is not buying her health insurance from the marketplace ( likely at age 65)

 

[rothlev]

I met with an Ameriprise gal back in my early 30's. She spent the majority of her time trying to recruit me to work under her. Thankfully, I declined.

When I worked my retirement gig at H&R Block, we had an Ameriprise lady that was assigned to our district. From time-to-time, she'd come into the office to hand out cards and chat with the tax preparers. She was pretty smart and was also a CFP, but I was pretty shocked at her lack of tax knowledge. I'm sure she wasn't supposed to provide tax advice to her clients, but she basically had no understanding of how the investments she was selling were taxed. I trained her as best I could.

I do BLOCK as a retirement gig also, and I remember when we were hooked up with Ameriprise, ( I think Block financials was sold to Ameriprise , so for a few years they had an agreement with them). He used to come to the office also, brought us ice cream once, wanted us to refer our clients to him. I always smiled and agreed and then ignored those directions . If I had someone who needed a brokerage I always suggested vanguard or fidelity.

 

[Koolau]

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

I made the acquaintance of an EJ guy recently at a social function. He gave me a very useful ballpoint pen. I treasure it because it doesn't leak or smear like many cheap ad pens. I enjoyed talking to the EJ guy (not about finances). Glad he didn't put the bite on me about becoming a client. I'd looked into that 25 years ago and even then (stupid as I was at the time) I realized it was NOT the way to go for me. YMMV

 

[athena53]

An update on my 529 research although it's a bit OT: yes, Iowa's plan looks good but the only way for DS and DDIL to get the tax benefit (they're IA residents, I'm not) is for them to own the accounts, meaning that they'll count against any needs-based financial aid the kids could get. They'd get maybe $1,200 state tax reduction for $20,000 in contributions (husband and wife limited to about $10K contribution each). That means if I gift them anything more than $10K over and above that I have to start reporting it for estate tax purposes.

BUT...Fidelity has access to a Massachusetts plan open to non-residents that offers ETFs. Going forward I'll leave what I have with Eddie, deposit the max I can deduct off my MO taxes to EJ ($8K in 2021, I think) and the rest will go into the Fidelity account, which I will own.

Thanks for making me think. The oldest is 7 so I have plenty of years to reap the benefits of lower expenses.

 

[PatrickA5]

An update on my 529 research although it's a bit OT: yes, Iowa's plan looks good but the only way for DS and DDIL to get the tax benefit (they're IA residents, I'm not) is for them to own the accounts, meaning that they'll count against any needs-based financial aid the kids could get. They'd get maybe $1,200 state tax reduction for $20,000 in contributions (husband and wife limited to about $10K contribution each). That means if I gift them anything more than $10K over and above that I have to start reporting it for estate tax purposes.

BUT...Fidelity has access to a Massachusetts plan open to non-residents that offers ETFs. Going forward I'll leave what I have with Eddie, deposit the max I can deduct off my MO taxes to EJ ($8K in 2021, I think) and the rest will go into the Fidelity account, which I will own.

Thanks for making me think. The oldest is 7 so I have plenty of years to reap the benefits of lower expenses.

Fidelity also has a New Hampshire National plan, so you might want to compare the two.

 

[foxfirev5]

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.

Probably a valid point for those that don't share the perspective of this forum. Sometimes DIY is not optimal. I'm thinking about a few of my plumbing adventures.

 

[F.I.R.E User]

I made the acquaintance of an EJ guy recently at a social function. He gave me a very useful ballpoint pen. I treasure it because it doesn't leak or smear like many cheap ad pens. I enjoyed talking to the EJ guy (not about finances). Glad he didn't put the bite on me about becoming a client. I'd looked into that 25 years ago and even then (stupid as I was at the time) I realized it was NOT the way to go for me. YMMV

So you never had EJ?

 

[clifp]

I think you're right.



Guys (and gals), there is a lot of energy and expertise in this thread. Please consider contacting your local adult-ed programs and volunteering to teach. My course is three, two-hour, sessions but even a one hour class covering the pitfalls might suffice protect a few people. You'll feel good about it.

I spent about 30 minutes digging Hawaii's dept of education trying to find out how to volunteer to do such a thing, with not much luck.

For your state was this done as part of the community college system or high school adult education program?

It is a good thing to do and you are right many folks on the forum would be perfect teachers.

 

[Koolau]

So you never had EJ?

I went so far as to sit down with a EJ rep. He told me all the stuff he could do for me, but it meant turning over my money (and decisions) to him. No way!

 

[Badger]

I went so far as to sit down with a EJ rep. He told me all the stuff he could do for me, but it meant turning over my money (and decisions) to him. No way!

I had the exact same experience with a ML rep about 20 years ago when they were the only game in town for my wife's 403b except for a number of insurance annuities. Every year millions of teachers around the country get screwed in their 403b retirement investments set up by their school boards. I figured out a convoluted way around it to get her money into either TRowe Price of Vanguard funds. I forget which one. It's been 20 years.


Cheers!

 

[mystang52]

I had the exact same experience with a ML rep about 20 years ago when they were the only game in town for my wife's 403b except for a number of insurance annuities. Every year millions of teachers around the country get screwed in their 403b retirement investments set up by their school boards. I figured out a convoluted way around it to get her money into either TRowe Price of Vanguard funds. I forget which one. It's been 20 years.


Cheers!

We had a similar experience with DW's 403b. We took a small hit to pull the money out and put it in Index funds.

 

[rodi]

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

Family member recently passed. He had a terminal disease so he mailed a 'treasure map' to his brother. My husband and this brother had to open up walls, chisel out a hole in the basement foundation, look in books and behind bookshelves. Cash, silver coins, gold coins, a flash drive with some bitcoin. They are not completely sure they found everything since some of the treasure map spots turned up empty and they found at least one stash that wasn't on the map.

But he never had to pay FA fees. And the silver/gold/bitcoin all continued to mature while hid in the walls. LOL.

 

[OldShooter]

Probably a valid point for those that don't share the perspective of this forum. ...

Yes, definitely, but where we get consulted we can at least push people toward the holy trinity of Schwab, VG, and Fido, then suggest the robos or the lower cost advisory options. Just because someone needs or wants a non-DIY option doesn't mean it's ok for an FA to rip them off.

 

[Chuckanut]

Every year millions of teachers around the country get screwed in their 403b retirement investments set up by their school boards.

As a former teacher I have never figured out why my supposedly rich, powerful and nearly omnipotent teacher's union allowed this kind of abuse to continue.

I got out of my crummy, loaded , high cost 403b when I accidentally discovered that my state allowed teachers to take advantage of the Deferred Compensation plan offered to state employees. The DC plan included low-cost index funds!! Yea!

 

[athena53]

As a former teacher I have never figured out why my supposedly rich, powerful and nearly omnipotent teacher's union allowed this kind of abuse to continue.

Let me take a guess. Before there was so much pressure on mutual fund companies to reduce fees, some of the fund companies rebated a portion of the fees back to the employer to be used for expenses related to the retirement plan such as record-keeping. Conflict of interest? Yeah, I'd say so. The union may still be getting some sort of rebate. Here's one article that explains it.

https://www.leadingretirement.com/blog/the-value-of-reducing-rebates-and-revenue-sharing-in-your-40

 

[travelover]

As a former teacher I have never figured out why my supposedly rich, powerful and nearly omnipotent teacher's union allowed this kind of abuse to continue.

I got out of my crummy, loaded , high cost 403b when I accidentally discovered that my state allowed teachers to take advantage of the Deferred Compensation plan offered to state employees. The DC plan included low-cost index funds!! Yea!

I've shared before how my fireman nephew was getting similarly screwed by his union's retirement "advisors". They just can't help themselves

 

[Koolau]

Let me take a guess. Before there was so much pressure on mutual fund companies to reduce fees, some of the fund companies rebated a portion of the fees back to the employer to be used for expenses related to the retirement plan such as record-keeping. Conflict of interest? Yeah, I'd say so. The union may still be getting some sort of rebate. Here's one article that explains it.

https://www.leadingretirement.com/blog/the-value-of-reducing-rebates-and-revenue-sharing-in-your-40

I've shared before how my fireman nephew was getting similarly screwed by his union's retirement "advisors". They just can't help themselves

Wasn't it Bob Dylan who said you "Gotta Serve Somebody?" One way or the other, bosses or union, you gotta serve somebody. YMMV

 

[athena53]

An update on this- following this discussion I did some research and have decided that form now on I'll put the first $8K into the 529s at EJ to get the maximum tax deduction for my state (Missouri) but anything beyond that is going into the Fidelity accounts I just set up today. The oldest of the 3 grandchildren is about to turn 8 so it's a long enough time horizon that the difference in expenses will make a difference.

Interesting and frustrating how most (not all) of the state-sponsored programs have only high expense ratio funds for investment options.

 

[OldShooter]

An update on this- following this discussion I did some research and have decided that form now on I'll put the first $8K into the 529s at EJ to get the maximum tax deduction for my state (Missouri) but anything beyond that is going into the Fidelity accounts I just set up today. The oldest of the 3 grandchildren is about to turn 8 so it's a long enough time horizon that the difference in expenses will make a difference.

Interesting and frustrating how most (not all) of the state-sponsored programs have only high expense ratio funds for investment options.

Are the loads and fees at EJ acceptable? Seems unlikely given their reputation.

Too bad about being stuck in MO 529s. We get a small deduction on our state income tax regardless of what state 529 program we use. DW did the due diligence back when we started and we're in the Iowa program, which offers VG funds.

 

[Mulligan]

Are the loads and fees at EJ acceptable? Seems unlikely given their reputation.

Too bad about being stuck in MO 529s. We get a small deduction on our state income tax regardless of what state 529 program we use. DW did the due diligence back when we started and we're in the Iowa program, which offers VG funds.

I never thought MO had bad 529s when I invested in them for my daughter back in the day. But I never used Fat Ed either.

https://www.missourimost.org/home.html

 

[athena53]

Are the loads and fees at EJ acceptable? Seems unlikely given their reputation.

Too bad about being stuck in MO 529s.

I noted upthread (but it's a long thread!) that I pay 2% up front on American Funds in the EJ plan. That % tops out at 5.75% if you don't have any other American Funds but I own over $500K in American Funds in other (non-EJ) accounts. I actually like them although I'm gradually moving towards ETFs, which are more tax-efficient, and occasionally individual stocks. I did some research and couldn't find any MO plan that had ETFs so I'm happy with $8,000/year in EJ to get the MO deduction and the remainder in Fidelity.