Debt: Only a mortgage. $181,000 at 3.875% (20 year loan with 15.5 years left)
Tax Filing Status: Married filing jointly (1 child, 1 on the way)
Tax Rate: 28% Federal, 6.65% NY State
State of Residence: New York
Current Retirement Assets:
457 (His): $139,000. 90% TRRDX / 10% FFFFX - Max annual contribution ($18,000)
403B (Hers) $36,000. About to change advisors. Only a limited number of options. $10,000 contribution per year, increasing $1,000 per year
529 Plan: $8,000. Contributing $5,000 per year
Taxable Account: Raymond James $123,000. Contributing $15,000 - $20,000 per year
Holdings in this fund:
This is an actively managed account that we are paying 1.25% in fees and the expense ratios are all between .69-1.05%. I've been lurking on Bogleheads for a few weeks now and I'm getting the sense that I'm paying way way too much in fees and expenses. My advisor is a nice lady and she seems to be doing right by us (so it seems), but I started looking into Vanguard since so many people here seem to recommend it. I like the sound of the Vanguard Advisor, especially at .30% compared to the 1.25% I'm paying now and the much lower expense ratios. Has my advisor been killing me with fees and expenses with the funds she has me in? What happens when I move from Raymond James to Vanguard (i.e. tax wise). I'm going to call Vanguard on Monday and speak with an advisor. I would love to do it all on my own, but I looked at the list of Mutual Funds available and there were 127.....How do I even begin to choose the right one?
2. They have given you a complicated portfolio to scare you into thinking you can't do this by yourself. 19 funds in a 123,000 portfolio is nuts. You will get equal or better performance from a single TargetRetirement or LifeStrategy fund.
3. Because this is a taxable account, you should move all the funds to Vanguard with an "in-kind" transfer (Vanguard will help you with this, they love to move money from other places to Vanguard!). That moves all of your funds to Vanguard without selling them and incurring tax liability. After you move to Vanguard you can select which funds to sell and when to minimize your tax burden (hint, you sell everything with losses or small gains right away and get that money into low cost Vanguard funds).
4. If you pay Vanguard for the Personal Advisor Service, it will cost you 0.3% and they will help you select new, low cost funds. It's a great way to start. You can drop the PAS in a year or two if you decide that we (the BH forum) can help you do it yourself
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- Joined: Tue Dec 31, 2013 7:05 am
- Location: 26 miles, 385 yards west of Copley Square
By comparison, I have a 2 comma portfolio and pay a total of $900 per year.
Between my wife and I, we have all of our investment in the 3 fund plus savings bonds. This is across several providers. Mostly Vanguard and Fidelity. All are index funds (Advantage or Admiral) with 401ks and 403bs thrown in along with Roths and traditional and rollover IRAs. Excel is my friend and I know at all times what my asset allocation is. I can't think of a single thing that an advisor can do to help.
That is great to hear,,,,but
It has no bearing on the money that is being funneled away from you.
I suggest you contact Vanguard for their assistance in a transfer of assets.
Not difficult at all
You can even initiate the process on line
Vanguard mutual funds that have an ETF share class typically don't have yearly capital gains distributions (some bond funds might have a small one).
More $$ for you.
What makes you believe RJ has your best interests in mind?Awesome, thanks! I'm a little nervous moving because I feel like I'm getting a certain level of security by having someone like Raymond James in charge.
A friendly recommendation, do all the transfers on the Vanguard side, don't interact with the Raymond James "friendly lady" unless you absolutely have to, or else she will likely try to convince you to stay.
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While it's entirely possible that this was all resulting from a massive miscommunication and my own ignorance, I didn't like being told that I would be allowed to invest upon finishing extra paperwork, only then to be told that I would never be given online access to invest.
That's not what his firm preaches to normal clients though!
BTW, if you are depositing money into Raymond James using some kind of automatic funds transfer, you should cancel it right away.
A pickpocket is always very nice and polite while her hand is in your pocket....
Nice is a facade if they are not treating you fairly... and not acting as a fiduciary.
Good for you. That's exactly what you should do.TSWNY wrote:I'm a little nervous moving because I feel like I'm getting a certain level of security by having someone like Raymond James in charge. But I've done some rough calculations and figure I'm going to pay about $70-80K in fees there, so obviously that is an issue. I'm going to call Vanguard and get the ball rolling!
You're not getting "a certain level of security," you're getting unnecessarily complicated and costly advice that takes earnings out of your pocket.
https://investor.vanguard.com/mutual-fu ... etirement/#/
These are very similar to your (his) retirement funds, which are highly diversified investments,
all-in-one solution. Vanguard has same as Fidelity, or at least very close.
I don't understand why you have two funds in your (his) retirement account
Both are 2040 retirement funds, why not combine together to a single fund ?
Simplify your investments.
jane1 wrote:Make sure you have the Cost Basis (for taxable account) calculated for each Raymond James investment before you move to Vanguard. Once you close your account at RJ they will not be helpful.
Sorry, what exactly does that mean? Is this something the Vanguard Personal Advisor can help me with?
Similar issue happened with me with Morgan Stanley. Sure it was also my fault but I was young and thought my advisor was managing the funds or atleast thought they would give me a call. I did receive that call but it was years later when another advisor took over the account. I'm happily managing my own funds through Vanguard now.smartinwate wrote:I had a bit of difficulty with a Raymond James Roth account that I owned some years back. Turns out the money I had been putting into it sat in core and was never invested. (In fairness this was probably due to my own ignorance.) The problem came when I realized this and tried to invest the cash in something more productive than the holding account; I had no online access to invest this money. (I could see the cash balance but couldn't invest it.) Long story short, after filling out the forms that the Raymond James rep told me would grant me access to invest this money, I still couldn't invest it online; when I asked why, I was told that Raymond James does not allow online investing. I ended up pulling the funds from the account (which were all original contributions made more than five years ago), and moving them to Fidelity to a new Roth.
Cost Basis Is the amount it cost you to buy those mutual funds. It is essentially all the money you used to purchase all the shares you have. Jane is warning you to make sure you collect that information from Raymond James before you ditch them, because they will not be so helpful after you move your assets from them. Vanguard can't really help you on this- you need to do it before leaving Raymond James. Perhaps ask them to provide you the number for each of your funds?
For example, say you bought 100 shares of a fund for 1000. It is now worth 1300. Your cost basis is 1000. When you sell for 1300, you get back your original 1000, and you pay capital gains taxes on the $300 profit. Capital gains are usually better to have than ordinary income because they are taxed at a lower rate.
It gets more complicated if you have elected to 'reinvest dividends.' In that case you need to look up each year what dividends you have declared and paid taxes on that were reinvested to buy more shares and add those reinvested dividends to your basis. For example, say you paid 1000 for 100 shares, and every year for 5 years you had $20 of dividends (total 100) that you reinvested (and were taxed on) to buy 10 more shares total. Now you have 1010 shares that are worth 1300, your cost basis is the original $1000 plus the reinvested dividend total of $100=$1100. If you sell for $1300, you pay capital gains on only $200.
Hope this helps. Vanguard personal advisory services at only 0.3%- much better than you have now.
Stop and think for a moment. Do you know how much it costs for a national ad campaign? To produce a commercial? To pay for the advertising agency? To pay for all the TV media time? Let me give you a hint...it is not cheap. And who do you think is paying for all of that?TSWNY wrote:I guess I believed that they had my best interests in mind because I watched too many Raymond James commercials and they had me convinced that they would take care of me.
Have you seen any TV ads for Vanguard lately?
Top 10 Financial Advisor Firms With Highest Misconduct Rate
That's right.... Raymond James.
Go with VPAS or even betterment or wealthfront... and save the money. But better yet, use the 3-fund portfolio, target-date fund, or LifeStrategy fund that others on this thread have recommended.
Since the move weve saved over $1000 in fees.
your thoughts of using vanguard asvisor services are fine. You can use their help to get established, then either decide you want to learn more and DIY....or enjoy their support and keep using them. Nothing qrong qith either way, whatever lets you and family sleep best at night.
Investment costs of 2% is sheer madness. What are you waiting for?TSWNY wrote:This is an actively managed account that we are paying 1.25% in fees and the expense ratios are all between .69-1.05%.
There is an old retirement study** that shows removing (an inflation adjusted) 4%/year from a portfolio has historically been a safe amount to draw out without much fear of running out of money. It's kind of an obsolete rule of thumb now that bond returns are so low, and many folks here think a lower rate is safer. Age 70 required minimum distributions (RMDs) from IRA's and other tax deferred accounts start a bit below 4% and are increased a little every year.
Anyway, if 4%/year is a useful measure of what can be safely drawn out, you must realize that makes the safe amount you can personally draw to be only 2%. Raymond James management and their funds keeps the other 2%. Madness!
carolinaman wrote:You are approaching this correctly. Using Vanguard will dramatically reduce your fund and adviser costs and will also get you into very good low cost funds. Vanguard can help you transfer everything in a straightforward manner.
Just quote Donald Trump to your adviser, but in a nice way. Best wishes.
Good for you!TSWNY wrote:I did it!!! I set up my Vanguard account this morning and now I'm just waiting for the funds to transfer from Raymond James to Vanguard. Does anyone know if I'm going to get hit with any kind of fees or penalties for transferring out of Raymond James? I was a little naive to all the fees and expenses that I was paying, so I wouldn't be surprised if they tried to squeeze me one last time out the door.
There will probably be some kind of typical account closure fee like $50 or $100. Hopefully it won't be per fund.
Whatever it is it's definitely worth it.
http://www.raymondjames.com/services_an ... ount_maint
Retirement account termination fee.............................$100
There will be an account closure fee - Probably $50 - $100 (I moved from Schwab (not RJ) and it was $50).TSWNY wrote:I did it!!! I set up my Vanguard account this morning and now I'm just waiting for the funds to transfer from Raymond James to Vanguard. Does anyone know if I'm going to get hit with any kind of fees or penalties for transferring out of Raymond James? I was a little naive to all the fees and expenses that I was paying, so I wouldn't be surprised if they tried to squeeze me one last time out the door.
Congratulations, hope it goes smoothly for you. Vanguard is a good company to work with. I don't know about RJ, but I got hit with fees with my Edward Jones transfers last year and likely RJ will do so. Unfortunately Vanguard won't reimburse them. You will more than make up for the difference in a couple months.by TSWNY » Fri Mar 18, 2016 10:31 am
I did it!!! I set up my Vanguard account this morning and now I'm just waiting for the funds to transfer from Raymond James to Vanguard. Does anyone know if I'm going to get hit with any kind of fees or penalties for transferring out of Raymond James? I was a little naive to all the fees and expenses that I was paying, so I wouldn't be surprised if they tried to squeeze me one last time out the door.
Once you get the above sorted out, you exchange the RJ funds that come over and purchase the above mutual funds at Vanguard, it's pretty easy to do and forum members can walk you through this. Give this a shot and post your initial results. I think there was a post above, but to reiterate, in your taxable account, any sale of the RJ mutual funds will be a taxable event, e.g. you will have a capital gain or loss depending on the cost basis. So you may want to do a spreadsheet to estimate the impact of selling those funds (and of course tax implications as well)
I only have one taxable Raymond James account that I will be closing.
I'll just comment on one thing I noticed about your initial posting. You've put away a lot of money in taxable but have not maxed contributions to her 403b, and I don't see any IRAs there. So you could be avoiding income taxes on an extra $19k yearly there ($8k more to 403, $11000 to two IRAs). In general, as you'll read on the wiki, you want to reduce your taxable income by maxing your tax-advantaged accounts (401, 403, IRAs: Roth if you can, backdoor Roth if your income is above the Roth contribution limit) before you start accumulating taxable savings (unless those savings are targeted for a down payment or car, but since you have a mortgage, I'll guess that's not the case).
Welcome to the light side!
I don't know whether the Vanguard PAS will help you determine what to sell (probably will, it's pretty straightforward) but once you get it transferred, if you post up your holdings along with their cost basis, people here will also help.
Vanguard family of mutual funds can be bought and sold for no commission but that is not the case for non-vanguard family mutual funds.
If your total gain is ~$5000 on a portfolio of $120K, check if most of the gain is in 1-2 funds on a small part of the portfolio. Then you can sell most at a loss and immediately buy the vanguard funds.
If gain is mainly long-term, your tax hit will not be that much, and you can start with a "clean" portfolio sooner rather than dragging the process.
Agree. Why pay the wrap around fee for EJ brokerage. It is really easy to have the standard 3 ETF fund portfolio at Schwab or Fidelity. Don’t let anyone convince you that you aren’t smart enough to invest yourself. In fact don’t even talk to anyone at EJ - they are good at convincing you to stay - it is their livelihood
Congratulations. I hold the three fund portfolio.TSWNY wrote: ↑Fri Mar 18, 2016 11:12 amAll of the 19 funds that I currently hold at Raymond James are going to be moved over to Vanguard. I would like to get rid of them and scale down, probably a simple 3 fund portfolio. Will Vanguard Personal Advisor help me figure out how/when to sell what I have to minimize my tax liability? This is where my head starts to feel like it's going to explode and where I feel like I'm in over my head. I thought I had a decent working knowledge of things, but once I started reading about things like this I found out I'm way behind. I just want a fresh start and want to do it with as little pain as possible.