Leaving EJ for Fidelity- what to know?

[stygz]

I am considering moving over the next few months from EJ to Fidelity. I own multiple ETFs and mutual funds. Some of the Mutual funds are with American. I read somewhere I may be charged a 1% fee on the ones less than a year old. Anyone know if this? I also read of people getting some of the transfer fees covered by Fidelity..

What else do I need to be prepared for leaving a full service place? What about record keeping type stuff for taxes and such? I assume Fidelity provides all my tax forms at the end of the year such as 1099r. I saw somewhere a fee for record keeping is why I ask.

Will my cost basis carry over to Fidelity?

We have 2 Roth accounts, 2 trad IRAs, a taxable account, and a inherited IRA.

I am trying to learn and gather the pit falls.

I have been browsing Fidelity and found a few mutual funds and ETFs that I would use to build my portfolio with. I also have the TSP. At a very minimum I would stop with our Roth’s at EJ (American Funds) and make up for it in my Roth TSP.

If we make the full move to Fidelity, it would be at the new year. To get a cleaner break. I like the EJ guy as he has taken us further than we would have been ion our own over the past decade. But the cost going forward are high and I am more willing to do some work and planning at my stage in life.

FYI I am 41 and wife is 40. We are planning on retiring at 58 from federal service / military. This whole rabbit hole started on a recent post of the money guys and talking about American Funds.

 

[DrRoy]

I have been with Fido for 40 years. Very satisfied. Talk to them about your questions. In the past, they have paid a bonus for bringing new money in. I don't know what they might do now but check it out.

 

[Midpack]

OP, why not just call Fidelity and ask these questions? Even as a prospective customer, they’ll be happy to provide answers. They transfer brokerage accounts every day, and they make it very easy. They will know which holdings can be transferred in kind to avoid a taxable event, probably most. And you’ll have a customer experience with them before you make the switch..

I assume you found this to read before you call https://scs.fidelity.com/webxpress/help/topics/learn_transfer_assets.shtml

Leaving EJ is probably a good idea.

 

[target2019]

If you need details on the move, what may transfer, etc., the final word is from EJ or Fidelity. Policies do change so you want to get the latest news from the horse's mouth rather than what others may recall. Hope it all works out for you.

 

[arcyallen]

A few points:
-Ask your EJ guy some of your questions. He should be willing to answer any that he can. He should be loving you when you walk in the door, and loving you when you leave. Also ask what exactly you're paying for fees, and what the lower cost options are. I am a big fan of A-share mutual funds for people that want full service. I'm not such a big fan of managed accounts that are cheaper up front but have a much higher ongoing expense.
-I'd be slow to sell any American Funds you have. Look hard at them and compare them to what you're thinking about reinvesting in. Every single one of their equity funds that have existed for awhile have outperformed their benchmarks since inception, often with less volatility. Some people will try to tell you that's not possible - it is. If you ignore the rhetoric about actively managed funds you'll see there are some gems out there that consistently do what they say they'll do. This doesn't necessarily make them good or bad for you, just something to possibly research more.
-Nothing is permanent! If you decide to leave you can always go back. Or, if you wait a bit you can always leave later. The good news is no one should be locking you in anywhere - and if they try, run. The grace (or lack thereof) your advisor shows when you tell him you're leaving should be a good metric for this.

 

[scrabbler1]

I help a friend with his portfolio. After a large inheritance back in late 2012, we met with a Fido Account executive before doing an electronic transfer of many holdings to Fido from Morgan Stanley and TD Ameritrade, all of which went smoothly (with some cash bonuses because they were large). In 2018, we did additional electronic asset transfers from Raymond James which also went smoothly. I had checked with Fido beforehand to make sure any non-Fido mutual funds would transfer cleanly - they did, except for fractional shares having to be cashed out first (automatically) before the transfer took place.

Fido prepares all those 1099 forms early in the year after the tax year is done, although I have had some minor problems with how they figured out a few things in the Wash Sale area. I have had a growing set of minor problems with them, many (but not all) of them due to having one of those older style mutual fund accounts, not a brokerage account. It becomes annoying after a while when the responses I get are always, "We're sorry for the inconvenience, but thanks for being a Fidelity client......"

 

[RetMD21]

There was no charge from American when we moved my mother's account to Vanguard. Are they class A shares? IIRC Edward J charged a flat fee of maybe $75. All the cost basis info transferred.

 

[scrabbler1]

Stygz, I forgot to mention that cost basis carried over for my friend, both times. Fido picked up the other company's transfer fees, but not their account closeout fees.

 

[COcheesehead]

Before you initiate any transfer try and negotiate a transfer bonus. Over the years I have received as little as $600 and as much as $2500 from Fidelity.

 

[eytonxav]

Fidelity should be able to provide you information on which holdings can be transferred in kind.

 

[38Chevy454]

Agree that Fidelity can assist you. Ho to a local Fidelity office and with an advisor. Get the process understanding. Most should be able to transfer in kind. Thats a common process for switching between brokers. Even if you have to sell and transfer cash, the pre tax and Roth won't cause any tax consequences. The after tax brokerage could if forced to sell. EJ may not be happy about your leaving, and possibly some fees to get out, but let Fidelity do the work.

 

[MRG]

Run, don't walk to Fidelity and have them pull your money. Don't talk with Fast Eddie because he's been hand picked and groomed/trained for lying. Run away from American Funds too, you can do much better without the yearly drag from 12b-1 fees. Once in a while they'll have a good year and then go back to mediocre performance. Consider the possibility of taxes the first year, Fidelity won't give tax advice but they will tell you what is a taxable event. Good luck and best wishes for leaving a dying paradigm of investing.

 

[bloom2708]

Have Fidelity pull the funds to them. $95 to close an EJ account is a drop in the ocean of fees.

You will need to liquidate some EJ funds that likely won't transfer.

For my parents, I wrote a very clear letter with steps to execute and had them sign the letter. When the EJ rep called, they thanked him and then referred to the instructions in the letter. When he tried the hard sell/guilt trip, they thanked him again and referred to the letter.

You will save thousands in fees and your portfolio will be miles and miles simpler. So many redundant funds and high expense ratios, 12b-1 fees. EJ is a hot mess of fees. It is sad because so many use them who can't afford those fees over 30-40 years.

Rip off the band aid and get the move done. Fidelity or Vanguard.

 

[stygz]

Thank you for the responses. I will have to ask about Fidelity bonuses and transfer reimbursement.

Yes my American funds are cl A. The load expense is water under the bridge. They perform well but the expense ratio is high. Likely I would let them grow and stay in my portfolio and reinvest in cheaper funds going forward.

Good to know my cost basis should move with Fido. I have already started to ask Fido some questions.

I mentioned to my EJ advisor about the high expenses with American Funds. I asked about doing some ETF's. Basically I pay a 4% load on American Funds to buy and no cost to sell. With the ETF, I pay 2% to buy and 2% to sell....basically the same but I get a better number up front for slightly better growth.

 

[corn18]

Why the heck should you pay anything to buy and sell? Run away from all things EJ. Now.

 

[Qs Laptop]

I left EJ for Fidelity back in early 2017 so I know the process. I had two IRA's, a taxable account, and an Edward Jones Advisor account.

A few points:
-Ask your EJ guy some of your questions. He should be willing to answer any that he can. He should be loving you when you walk in the door, and loving you when you leave. Also ask what exactly you're paying for fees, and what the lower cost options are.

No, I wouldn't say a word to the EJ guy. He's going to try anything and everything to get you to stay at EJ. Fidelity can handle the entire process from their end.

I am a big fan of A-share mutual funds for people that want full service. I'm not such a big fan of managed accounts that are cheaper up front but have a much higher ongoing expense.

OK, but what is "full service"? Buy and hold is the typical investment strategy with mutual funds. That's not worth paying the 5.5% upfront load fee. (4.5% fee if over $100K, 3.5% if over $500K.) Plus, EJ introduced a assets under management fee for IRA's in 2018. That was my trigger event to get me to leave them. So on top of whatever load you paid up front there was a 1.35% annual management fee. This is on top of the American Fund expense ratio fees.

-I'd be slow to sell any American Funds you have. Look hard at them and compare them to what you're thinking about reinvesting in. Every single one of their equity funds that have existed for awhile have outperformed their benchmarks since inception, often with less volatility. Some people will try to tell you that's not possible - it is.

While it is possible to beat the benchmarks, I found only a couple American Fund equity funds that consistently beat the S&P500 index. These were AMCAP Fund and the Growth Fund of America. "Consistent" does not mean every year, but perhaps 8 out of 10 years, meaning the 10 year return bested the 10 year return of the index fund. Of these two American Funds the The Growth Fund of America was the clear winner. A consolation prize to the New Economy Fund.

Best thing I ever did with my investments was leaving EJ for Fidelity.

 

[stygz]

I don't believe I am paying a management fee on top of the load. I was given the option as I was grandfathered in.The EJ guy advised against opting in to the program but I can recheck that.

 

[CabinLifeAt50]

Fido has been great for my family and I. We've had accounts moving in and out throughout the years. Give them a call and work with their reps if you have any questions. Like any place some reps are great others are so-so, call back if not happy with the first one. Many things for transfers etc can be done online as well. Never had issues with the tax documentation either.

Just fyi here's a link with some of their current promos but as others have noted also worth a call to see if they can offer any better incentives based on whatever value you are moving over. https://www.fidelity.com/go/special-offer

 

[Qs Laptop]

I don't believe I am paying a management fee on top of the load. I was given the option as I was grandfathered in.The EJ guy advised against opting in to the program but I can recheck that.

I would definitely check on it. It was first announced the spring/summer of 2017 to be coming in 2018. When I was in one of the several meeting with my EJ guy he brought it up. I dropped several hints I would leave if this were to be implemented. I asked if there was a way around it and he said no. I had been with EJ since 2009.

 

[stygz]

I would definitely check on it. It was first announced the spring/summer of 2017 to be coming in 2018. When I was in one of the several meeting with my EJ guy he brought it up. I dropped several hints I would leave if this were to be implemented. I asked if there was a way around it and he said no. I had been with EJ since 2009.

I will send them an email now. I remember it was a thing with Obama. If I remember correctly I was grandfathered in as I already had a dollar cost averaging plan going.

 

[Souschef]

I moved all of DW's holdings from UBS to Fido like you are planning to do with EJ. Some time previously, UBS bought Paine-Webber, so DW was stuck with UBS.
I transferred her holdings to Fido, then looked at the expense ratios of her funds and they were ridiculous. I sold out the funds and bought equivalent Fido funds.

 

[stygz]

This is what I came up with:

I made a call to Fidelity about transfer fees. If the account is over 25k they will cover the fee. I have a mostly inactive traditional IRA and another account less than 25k. The person on the phone gathered my contact info and is going to have someone call me back to talk more.

Since then I opened a Fido account to get a feel for the company. I put a $20 in and built a watchlist. I will buy two ETFs from my list on Monday.

I sent a message to EJ. I wanted to verify my fees. I believe we pay $40 for the first account plus $20 for each additional account. I will verify if I do or do not pay an overall management fee as I cannot see that I am. I have a "select account". I looked up my trade slips and I pay 5% for MF's and 2% for Stocks and ETF's. There may be a sell commission. I probably have not sold anything in 5 years.

As I work through this, I need to at the very least stop the American Funds at 5% Load/Commission in our Roth.It is handicapping me at the front. I will either move to a 4 types of ETF's (with or w/o EJ) or divert my Roth IRA (we max both of them out every year) or increase our Roth TSP to make up for the difference on our Roth IRA.

I may even pause my EJ stuff and fool with Fido for a calendar year and not transfer my EJ stuff as I do not believe we are paying a management fee.

For the record, I am not mad or disappointed in EJ. I have been working with the same guy for almost 10 years. We meet over the phone once a year and we talk as needed. I get what I pay for as in "full service". The American funds thing is also my fault as I did not ask or didn't look at some aspects of it when I said to go that route. In the end I am the decision maker and I carry some responsibility.

More to come.

 

[RetMD21]

Yes my American funds are cl A. The load expense is water under the bridge. They perform well but the expense ratio is high. Likely I would let them grow and stay in my portfolio and reinvest in cheaper funds going forward.

Yeah as long as you stop reinvesting you could hold at least for a while. The EJ rep in my mother's case wasn't all that much fun to deal with so I was glad that we just transferred everything at once. My wife was able to get some American funds w/o a load through a 401k. They seemed pretty good.

 

[arcyallen]

stygz, you can buy American Funds from Fidelity with no load because they're not a full service firm. Like I mentioned earlier, compare what you're considering buying with what you've got already. IF you find you have good funds already, it's likely easy to transfer them. Dumping a fund company because just because you heard "all active funds are bad" is ill-advised. Do your due diligence and do whatever you think is best. If "beating the S&P500 index" is all you're interested in (and I hope it's not) their oldest fund has beat the index since inception, for over 80 years. People can twist numbers around, but that's an impossibility according to many.

 

[stygz]

I did some more examining of my fees with EJ. Under my current plan and investment strategy, I am paying about $1,200 a year. This includes a the 5% load on my American Funds, 2% in our taxable account (ETFs), and account maintenance fees on a $225k account that invests $2500 a month.

If I were to drop the American funds and divert the money to a few ETFs, my yearly fees across all my accounts would drop to about $720.

I will say this particular year our fees were higher as we put about $14k into google on a one time purchase. This is not a recurring thing. Yes, I could have done that buy on Fidelity for $0.

Considering many are paying 1%+ for a managed account, my numbers seem much less.

Am I missing something?