Edward Jones Guided Solutions

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millennialfalcon
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Edward Jones Guided Solutions

Post by millennialfalcon » Tue Nov 29, 2016 9:28 pm

I have read many of the war stories/first-hand accounts on this forum in reference to your friendly neighborhood salesperson, Edward Jones. I have something I have not yet seen covered...Guided Solutions (not to be confused with Advisory Solutions). In this case, I have no beef with the EJ advisor; it is their damn new account.

My work has a SIMPLE IRA with Edward Jones that prior to the changes explained below consisted (for me) of two American Funds funds (Class A, 5.75% load that was partially waived based upon the combined account balances of my company exceeding $1M under management). I have not been at this job for very long, so I had not done any research to see how/whether I could to any better until just now.

If this were not bad enough, we were informed that because of the Department of Labor fiduciary rules, we could no longer have this account, our funds would need to be transferred to the new Advisory Solutions account, then liquidated to conform to the Advisory Solutions standards--what I have intuited to mean that there can be no Class A funds (only institutional) with more "diversification" (7 funds in lieu of my 2 with ERs in the range of .4% to .9%). The real kicker? The AUM fee for my account is 1.5% yearly because of my comparably low balance (4 figures).

I spoke with the EJ advisor about the new fee structure, and the advisor was forthcoming and explained the fees to me in terms I could understand, even offered to reduce the AUM fee to 1.3% (EJ advisor was selling me, of course). I informed the EJ advisor that I only contribute to get the 3% employer match, nothing more, and that I viewed 1.5% as something I could never swallow, understanding that fees compound over my 4 decade horizon.

This EJ account is not a large part of my portfolio. I am 30 and have a risk tolerance that I think is age appropriate. I have my Roth and a Rollover IRA both parked at Vanguard in a Target Retirement Fund (ER of .18%). If I open a SIMPLE account with Vanguard, I have enough assets with them for their yearly $25 per fund fee to be waived.

Now for the questions: I thought we had a 5305 SIMPLE IRA (that is what the EJ form says, which I understand prohibits me from designating where my payroll and employer match go), but the EJ advisor said I could open a SIMPLE account anywhere and submit the documentation to payroll for them to fund a SIMPLE account of my choosing. Can anyone provide any insight on a similar situation? Or if someone has some specialized knowledge of the two different kinds of SIMPLE IRAs, could they chime in? Because I thought the 5305 type of plan restricted me to it, I had planned on opening a "frozen" SIMPLE IRA account at Vanguard and doing direct transfer of cash (I would liquidate any fund holdings and choose the cheapest option I could fund, money market, etc.) to the Vanguard SIMPLE if this can be done. Obviously, if I can open my SIMPLE IRA at Vanguard and designate them as custodian to receive my payroll deduction with the employer match, I would much prefer that.

I absolutely love this forum, and I look forward to the responses I will receive.

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FiveK
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Re: Edward Jones Guided Solutions

Post by FiveK » Wed Nov 30, 2016 6:50 am

You might check with your employer, instead of EJ, to see how the employer set it up.

See Publication 560 (2015), Retirement Plans for Small Business - SIMPLE Plans for more.

Even if you are restricted to using EJ for the initial deposit, you can get it out later. See Rollover Chart - rollover_chart.pdf.

krow36
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Re: Edward Jones Guided Solutions

Post by krow36 » Wed Nov 30, 2016 12:17 pm

Have you read this thread? viewtopic.php?f=2&t=163592

krow36
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Re: Edward Jones Guided Solutions

Post by krow36 » Wed Nov 30, 2016 5:15 pm

I talked to the Small Business retirement plan folks at Vanguard last year and I think it works this way with Vanguard: If the employer uses the 5305 SIMPLE, the employer signs up using the VG SIMPLE IRA Plan Authorization form. Each employee separately establishes an account there also, using VG’s SIMPLE IRA New Account form.

With a 5304 SIMPLE, each employee can select their own provider and this requires that the employer establish an account (using the Plan Authorization form) at each of the providers. The 5304 or 5305 SIMPLE form is not sent to the provider or to the IRS, but is given to the employees every October, returned to the employer in Dec. and kept on file. So the provider doesn’t actually know if they are dealing with a 5304 or 5305 SIMPLE.

I suspect the EJ rep was saying that if your employer was willing to fill out VG’s SIMPLE Plan Authorization form, and you established your personal SIMPLE account with Vanguard, you could end up with what is in effect your own little 5304 SIMPLE. Your employer would have to be cooperative, and I suspect if the IRS ever did an inspection, they might not be happy but I don’t really know. It’s possible that EJ has done this is the past and has gotten away with it, who knows? Or it could be possible that the EJ rep was confused?

I think you should probably bite the inconvenient bullet and use the Vanguard “frozen” SIMPLE account and do frequent asset transfers using a MM fund. 2 years after your first SIMPLE contribution, you can use a tIRA instead of the frozen SIMPLE account. Maybe you can convince your employer to set up a 5304 SIMPLE in Oct 2017 for 2018? SIMPLE IRAs are calendar year plans and the IRS requires they be set up 60 days before Jan. 1 (before 2 Nov.). Setting up means that the 5304 or 5305 forms are passed out to the employees.

dognose
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Re: Edward Jones Guided Solutions

Post by dognose » Wed Nov 30, 2016 6:13 pm

Dump Edward Jones immediately. Run. Do not look back.

Topic Author
millennialfalcon
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Re: Edward Jones Guided Solutions

Post by millennialfalcon » Wed Nov 30, 2016 10:34 pm

FiveK wrote:You might check with your employer, instead of EJ, to see how the employer set it up.

See Publication 560 (2015), Retirement Plans for Small Business - SIMPLE Plans for more.

Even if you are restricted to using EJ for the initial deposit, you can get it out later. See Rollover Chart - rollover_chart.pdf.
Thanks for the cite to Pub 560. As far as I can tell, employer used EJ's forms to establish the plan. I visited with the office manager about it, and I can really come to no other conclusion.

Topic Author
millennialfalcon
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Re: Edward Jones Guided Solutions

Post by millennialfalcon » Wed Nov 30, 2016 10:36 pm

krow36 wrote:Have you read this thread? viewtopic.php?f=2&t=163592
You are a godsend. I did find this thread, but I neglected to go and read Notice 98-4. It's what I need.

Topic Author
millennialfalcon
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Re: Edward Jones Guided Solutions

Post by millennialfalcon » Wed Nov 30, 2016 10:41 pm

krow36 wrote:I talked to the Small Business retirement plan folks at Vanguard last year and I think it works this way with Vanguard: If the employer uses the 5305 SIMPLE, the employer signs up using the VG SIMPLE IRA Plan Authorization form. Each employee separately establishes an account there also, using VG’s SIMPLE IRA New Account form.

With a 5304 SIMPLE, each employee can select their own provider and this requires that the employer establish an account (using the Plan Authorization form) at each of the providers. The 5304 or 5305 SIMPLE form is not sent to the provider or to the IRS, but is given to the employees every October, returned to the employer in Dec. and kept on file. So the provider doesn’t actually know if they are dealing with a 5304 or 5305 SIMPLE.

I suspect the EJ rep was saying that if your employer was willing to fill out VG’s SIMPLE Plan Authorization form, and you established your personal SIMPLE account with Vanguard, you could end up with what is in effect your own little 5304 SIMPLE. Your employer would have to be cooperative, and I suspect if the IRS ever did an inspection, they might not be happy but I don’t really know. It’s possible that EJ has done this is the past and has gotten away with it, who knows? Or it could be possible that the EJ rep was confused?

I think you should probably bite the inconvenient bullet and use the Vanguard “frozen” SIMPLE account and do frequent asset transfers using a MM fund. 2 years after your first SIMPLE contribution, you can use a tIRA instead of the frozen SIMPLE account. Maybe you can convince your employer to set up a 5304 SIMPLE in Oct 2017 for 2018? SIMPLE IRAs are calendar year plans and the IRS requires they be set up 60 days before Jan. 1 (before 2 Nov.). Setting up means that the 5304 or 5305 forms are passed out to the employees.
I don't want to stir the pot more than I have, and I don't want to be the one who encouraged my employer to be noncompliant with IRS rules, so I think I'll go the "frozen" route first. I've already educated my employer on the different types of plans and will push for 5304 next year. I think I'll have to push EJ to abide Notice 98-4 in transferring to my frozen SIMPLE IRA without cost etc.

I'm going to initiate the new account process with Vanguard to open the frozen SIMPLE account.

Topic Author
millennialfalcon
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Re: Edward Jones Guided Solutions

Post by millennialfalcon » Wed Nov 30, 2016 10:42 pm

dognose wrote:Dump Edward Jones immediately. Run. Do not look back.
This is the BH consensus. Cannot say I disagree.

krow36
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Re: Edward Jones Guided Solutions

Post by krow36 » Thu Dec 01, 2016 1:58 am

You can download the 2 VG forms:
VG SIMPLE IRA New Account form
https://personal.vanguard.com/us/ElfPDF ... 0572638963
VG SIMPLE IRA Asset Transfer Authorization
https://personal.vanguard.com/us/ElfPDF ... 0572229895
I helped a relative go through this process recently with an EJ SIMPLE account with AF fund (MM). You can mail in the 2 forms together. The transfer form has these reminders at the end:
As you finish this form, remember to include:
* A copy of your most recent statement from the financial institution currently holding your IRA assets. 

* A signature guarantee (regular or Medallion) and related details if required by your current financial institution. 

* Your account number in Section 4, if you are transferring assets to an existing IRA. 

* A completed SIMPLE IRA New Account Form if you are transferring assets to a new account.
My relative had a problem due using the EJ account number on the transfer form and not supplying the AF account number.
On a 3 way phone call with VG and AF, AF said they didn’t need the medallion signature if the transfer was less than 250k.

retiredjg
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Re: Edward Jones Guided Solutions

Post by retiredjg » Fri Dec 02, 2016 9:42 am

One thing that is not clear is how long your SIMPLE IRA with your company has been open. If it has been 2 years (or close enough to wait a bit), you don't need to go with the frozen SIMPLE IRA route. You can simply do rollovers to any IRA, not the frozen SIMPLE IRA. I'd put contributions into something that has no load and do a rollover every few months.

We've seen earlier threads about how Edward Jones is having to change their approach in order to meet the new fiduciary rules. I'm VERY surprised that a high AUM fee inside a SIMPLE IRA is one of their "improvements". Not exactly what I expected. Enough different that I wonder if there is some misunderstanding.

Topic Author
millennialfalcon
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Re: Edward Jones Guided Solutions

Post by millennialfalcon » Sat Dec 03, 2016 3:01 pm

retiredjg wrote:One thing that is not clear is how long your SIMPLE IRA with your company has been open. If it has been 2 years (or close enough to wait a bit), you don't need to go with the frozen SIMPLE IRA route. You can simply do rollovers to any IRA, not the frozen SIMPLE IRA. I'd put contributions into something that has no load and do a rollover every few months.

We've seen earlier threads about how Edward Jones is having to change their approach in order to meet the new fiduciary rules. I'm VERY surprised that a high AUM fee inside a SIMPLE IRA is one of their "improvements". Not exactly what I expected. Enough different that I wonder if there is some misunderstanding.
My SIMPLE IRA has been open a little more than a year with this employer. Thanks for the rec on keeping out of loaded investments. I was planning on liquidating what's there and directing new contributions to cash/money market.

I have all the forms filled out to send to Vanguard for the frozen SIMPLE IRA and will update this thread with progress as it occurs.

As to the Guided Solutions fees, see here: https://www.edwardjones.com/images/guid ... f-fees.pdf

Here is the Guided Solutions brochure if anyone is interested: https://www.edwardjones.com/images/guid ... ochure.pdf

Topic Author
millennialfalcon
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Re: Edward Jones Guided Solutions

Post by millennialfalcon » Sat Dec 03, 2016 3:07 pm

krow36 wrote:You can download the 2 VG forms:
VG SIMPLE IRA New Account form
https://personal.vanguard.com/us/ElfPDF ... 0572638963
VG SIMPLE IRA Asset Transfer Authorization
https://personal.vanguard.com/us/ElfPDF ... 0572229895
I helped a relative go through this process recently with an EJ SIMPLE account with AF fund (MM). You can mail in the 2 forms together. The transfer form has these reminders at the end:
As you finish this form, remember to include:
* A copy of your most recent statement from the financial institution currently holding your IRA assets. 

* A signature guarantee (regular or Medallion) and related details if required by your current financial institution. 

* Your account number in Section 4, if you are transferring assets to an existing IRA. 

* A completed SIMPLE IRA New Account Form if you are transferring assets to a new account.
My relative had a problem due using the EJ account number on the transfer form and not supplying the AF account number.
On a 3 way phone call with VG and AF, AF said they didn’t need the medallion signature if the transfer was less than 250k.
I got both of the forms by requesting them in a secure message on Vanguard's site. Thanks for pointing out the right ones. And a special thank you for the reminder list. Hopefully this thread will be of use to future searchers.

retiredjg
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Re: Edward Jones Guided Solutions

Post by retiredjg » Sat Dec 03, 2016 4:25 pm

millennialfalcon wrote:My SIMPLE IRA has been open a little more than a year with this employer. Thanks for the rec on keeping out of loaded investments. I was planning on liquidating what's there and directing new contributions to cash/money market.

I have all the forms filled out to send to Vanguard for the frozen SIMPLE IRA and will update this thread with progress as it occurs.
I think this is a good decision. It will be some work doing frequent rollovers, but worth it.
As to the Guided Solutions fees, see here: https://www.edwardjones.com/images/guid ... f-fees.pdf

Here is the Guided Solutions brochure if anyone is interested: https://www.edwardjones.com/images/guid ... ochure.pdf
I didn't read everything, but get the idea. Awful. Just awful.

However, it is unclear to me if Guided Solutions is a program that is offered or a program that is mandatory. I think you think it is mandatory, but I think it may not be. Either way, your frozen SIMPLE at Vanguard is a better solution.

Topic Author
millennialfalcon
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Re: Edward Jones Guided Solutions

Post by millennialfalcon » Tue Dec 06, 2016 9:57 am

retiredjg wrote:However, it is unclear to me if Guided Solutions is a program that is offered or a program that is mandatory. I think you think it is mandatory, but I think it may not be. Either way, your frozen SIMPLE at Vanguard is a better solution.
The EJ rep said it was mandatory, and I think, for EJ's compliance purposes with retirement accounts and the fiduciary rule, it is. This ditches commission-generating fund and ETF purchases in favor of a fee-based (AUM fee) account to purchase funds and ETFs.

Thanks for your perspective, and I agree that Vanguard is better whatever actually comes of the EJ account situation. Their fees are just too much to swallow any way they slice it for you.

retiredjg
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Re: Edward Jones Guided Solutions

Post by retiredjg » Tue Dec 06, 2016 10:21 am

millennialfalcon wrote:The EJ rep said it was mandatory, and I think, for EJ's compliance purposes with retirement accounts and the fiduciary rule, it is. This ditches commission-generating fund and ETF purchases in favor of a fee-based (AUM fee) account to purchase funds and ETFs.
I guess it just rubs me the wrong way that an unnecessary "advisor" is forced upon an employee in a work plan. This is not the same thing as willingly going to EJ and asking for advice and management. It just isn't right. :annoyed

In fact, it is evil. :twisted:

The frozen SIMPLE IRA is clearly your best choice, no matter how much trouble it is.

If your employer's brother-in-law (or whatever) is the EJ rep, there is no fixing this. If your employer just doesn't know any better, there is hope the future could be different.

krow36
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Re: Edward Jones Guided Solutions

Post by krow36 » Tue Dec 06, 2016 9:44 pm

Previously, EJ farmed out their SIMPLE IRAs to AF and an AF no-load MM could be selected to receive the employees’ SIMPLE money. Under the new setup, does EJ allow you to use a no-load MM fund? Their MM or AF’s MM? Seems like I’ve read that the IRS requires that it be available? Thanks for posting about this new EJ development and please keep us informed about your experience.

retiredjg
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Re: Edward Jones Guided Solutions

Post by retiredjg » Wed Dec 07, 2016 7:15 am

Looking further into the brochure, I found this on page 12:
  • Comparing Costs and Expenses
    You can choose to forgo the services of Guided Solutions Fund and buy and sell securities through Edward Jones as a broker-dealer or through other brokers or agents not affiliated with Edward Jones. If you purchase these investments through Edward Jones as a broker- dealer, you generally pay sales charges or commissions, a portion of which would be paid to your financial advisor. A financial advisor will typically earn more in upfront fees and commissions when you use brokerage services. In the alternative, a financial advisor will typically earn more over time if you invest in Guided Solutions Fund. This creates a financial incentive and potential conflict of interest to the financial advisor when recommending Guided Solutions Fund instead of brokerage services.
It is possible this does not mean what it seems to mean - things can be misunderstood out of context. But I searched around and it seemed it could be in the context of benefit plans (such as SIMPLE IRA).

Not that this would make you want to use EJ…but it would be interesting to hear what the EJ rep says about it.

And yes, there is still a money market fund available.

Topic Author
millennialfalcon
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Re: Edward Jones Guided Solutions

Post by millennialfalcon » Wed Dec 07, 2016 4:48 pm

krow36 wrote:Previously, EJ farmed out their SIMPLE IRAs to AF and an AF no-load MM could be selected to receive the employees’ SIMPLE money. Under the new setup, does EJ allow you to use a no-load MM fund? Their MM or AF’s MM? Seems like I’ve read that the IRS requires that it be available? Thanks for posting about this new EJ development and please keep us informed about your experience.
Man, you pretty much described our previous situation exactly. Even I did not know that was how it was setup, and the EJ advisor did not even really explain it to me. The funds lived at AF, even though I only ever interacted with EJ.

Also, think you are right about having to let you have access to a no-load MM fund, but I think that AUM fee still applies? There is no $40 annual account fee now, but now I have to pay 1.5% no matter what? That part really confuses me. The IRS literature I have read about allowing transfers says without penalty or cost, so presumably they would be taking a risk in saying 1.5% AUM fee is without cost. That I'm not sure on.

I will keep this thread up to date. On that note, I dropped the Vanguard forms with my brand-new EJ statement (supporting doc) in the mail just today.

Topic Author
millennialfalcon
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Re: Edward Jones Guided Solutions

Post by millennialfalcon » Wed Dec 07, 2016 4:52 pm

retiredjg wrote:Looking further into the brochure, I found this on page 12:
  • Comparing Costs and Expenses
    You can choose to forgo the services of Guided Solutions Fund and buy and sell securities through Edward Jones as a broker-dealer or through other brokers or agents not affiliated with Edward Jones. If you purchase these investments through Edward Jones as a broker- dealer, you generally pay sales charges or commissions, a portion of which would be paid to your financial advisor. A financial advisor will typically earn more in upfront fees and commissions when you use brokerage services. In the alternative, a financial advisor will typically earn more over time if you invest in Guided Solutions Fund. This creates a financial incentive and potential conflict of interest to the financial advisor when recommending Guided Solutions Fund instead of brokerage services.
It is possible this does not mean what it seems to mean - things can be misunderstood out of context. But I searched around and it seemed it could be in the context of benefit plans (such as SIMPLE IRA).

Not that this would make you want to use EJ…but it would be interesting to hear what the EJ rep says about it.

And yes, there is still a money market fund available.
Thanks for digging into this. I had completely missed the "you may choose to forego" the Guided Solutions in my reading, but I do not think I want to be in a position where I am citing chapter and verse from the brochure to have the EJ rep open another account or subaccount for me.

Also, I love that you cited the part about the "potential conflict of interest." I think that is my favorite aspect about this "hey, we're compliant with the new fiduciary rule" stuff is that they are admitting this is going to be more expensive in the long run--and that, wait for it, that is a conflict of interest maybe even worse than taking the pound of flesh up front.

krow36
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Re: Edward Jones Guided Solutions

Post by krow36 » Wed Dec 07, 2016 5:37 pm

Also, think you are right about having to let you have access to a no-load MM fund, but I think that AUM fee still applies? There is no $40 annual account fee now, but now I have to pay 1.5% no matter what? That part really confuses me. The IRS literature I have read about allowing transfers says without penalty or cost, so presumably they would be taking a risk in saying 1.5% AUM fee is without cost. That I'm not sure on.
I hope that EJ is required to let you use the MM fund with no 1.5% AUM fee. If not then you could just mail in your Asset Transfer Form every month. If you then maxed your SIMPLE IRA (12.5k + 3% of salary) at about 14k/yr, your balance might not get much over about 1200. 1.5% of 1200 is only $18 for the year. That's not too bad compared to the EJ fees!? :)

acunn
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Re: Edward Jones Guided Solutions

Post by acunn » Wed Dec 07, 2016 6:05 pm

krow36 wrote:
Also, think you are right about having to let you have access to a no-load MM fund, but I think that AUM fee still applies? There is no $40 annual account fee now, but now I have to pay 1.5% no matter what? That part really confuses me. The IRS literature I have read about allowing transfers says without penalty or cost, so presumably they would be taking a risk in saying 1.5% AUM fee is without cost. That I'm not sure on.
I hope that EJ is required to let you use the MM fund with no 1.5% AUM fee. If not then you could just mail in your Asset Transfer Form every month. If you then maxed your SIMPLE IRA (12.5k + 3% of salary) at about 14k/yr, your balance might not get much over about 1200. 1.5% of 1200 is only $18 for the year. That's not too bad compared to the EJ fees!? :)

This is exactly what I am doing thanks to the wonderful folks at this forum. I have all of my and my employers match for my Simple IRA put in the money market account and transfer it to my IRA at Vanguard periodically. It has worked very well.

acunn
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Re: Edward Jones Guided Solutions

Post by acunn » Wed Dec 07, 2016 6:09 pm

Now that I look at the account again it says "cash" for holdings.... I also have no fee deductions but I do have interest paid from them :) I will watch for the 1.5% fee you mention.

krow36
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Re: Edward Jones Guided Solutions

Post by krow36 » Wed Dec 07, 2016 6:20 pm

milllennialfalcon, you should read acunn's recent thread on his EJ SIMPLE IRA. viewtopic.php?f=1&t=201097
He has gone through the change at EJ and is avoiding the AUM fee on his transfers to Vanguard. :D
Oops--maybe it's too soon to know?

acunn
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Re: Edward Jones Guided Solutions

Post by acunn » Wed Dec 07, 2016 6:52 pm

krow36 wrote:milllennialfalcon, you should read acunn's recent thread on his EJ SIMPLE IRA. viewtopic.php?f=1&t=201097
He has gone through the change at EJ and is avoiding the AUM fee on his transfers to Vanguard. :D
Oops--maybe it's too soon to know?

with great help from you krow36! And Thank you again for that.

this is my post: I think the other one is very similar though. Many of us learning how to jump ship from EJ here!!


viewtopic.php?f=1&t=185125

retiredjg
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Re: Edward Jones Guided Solutions

Post by retiredjg » Wed Dec 07, 2016 7:19 pm

What I think I found in the link you provided….there is a minimum $4 a month charge for using Guided Solutions. Apparently, there are no loads, just the outrageous fee (or $4 a month minimum), when you use Guided Solutions.

Topic Author
millennialfalcon
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Re: Edward Jones Guided Solutions

Post by millennialfalcon » Wed Dec 07, 2016 9:06 pm

retiredjg wrote:What I think I found in the link you provided….there is a minimum $4 a month charge for using Guided Solutions. Apparently, there are no loads, just the outrageous fee (or $4 a month minimum), when you use Guided Solutions.
Yep. I was actually most worried when I saw the minimum
charge for my comparably low balance. Somewhere else it says fees may be waived/reduced in EJ's discretion. I'm not banking on their discretion. I will update on how the SIMPLE to SIMPLE transfer goes as well as any additional efforts required. For now, I've told VG to liquidate all my positions at EJ and transfer the whole balance. I have not changed my payroll election to contribute to get the full employer match to EJ.

Topic Author
millennialfalcon
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Re: Edward Jones Guided Solutions

Post by millennialfalcon » Wed Dec 07, 2016 9:08 pm

acunn wrote:Now that I look at the account again it says "cash" for holdings.... I also have no fee deductions but I do have interest paid from them :) I will watch for the 1.5% fee you mention.
Do let me know. Glad we're in the same boat.

Topic Author
millennialfalcon
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Re: Edward Jones Guided Solutions

Post by millennialfalcon » Wed Dec 07, 2016 9:09 pm

krow36 wrote:milllennialfalcon, you should read acunn's recent thread on his EJ SIMPLE IRA. viewtopic.php?f=1&t=201097
He has gone through the change at EJ and is avoiding the AUM fee on his transfers to Vanguard. :D
Oops--maybe it's too soon to know?
Thanks for pointing me to this thread. Very helpful.

Topic Author
millennialfalcon
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Re: Edward Jones Guided Solutions

Post by millennialfalcon » Fri Dec 16, 2016 1:16 pm

A little update: I have been charged my first "program fee", which was $0.76. I guess this means that each month they will liquidate a holding to pay their program fee.

It has been a week since my completed transfer paperwork arrived at Vanguard. I do not have anything from them just yet (a secure message, for instance) saying they are processing it. I will update again when there is something else new.

Topic Author
millennialfalcon
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Re: Edward Jones Guided Solutions

Post by millennialfalcon » Thu Dec 29, 2016 4:31 pm

Latest update: Vanguard still has not opened the new account. They were really slow to respond to my secure message asking for an update. Just today I got a response saying they are in the process of opening the account and that I would receive confirmation when this is done. Once it is open, they will request the assets from Edward Jones.

Topic Author
millennialfalcon
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Re: Edward Jones Guided Solutions

Post by millennialfalcon » Wed Jan 04, 2017 2:38 pm

The SIMPLE IRA account showed up today in my Accounts Overview page on Vanguard's site. It does not appear to have an account number just yet. I expect I will get confirmation of this new account soon and that it will be assigned an account number. Then, sometime after that, I expect to see the transfer from Edward Jones to Vanguard processed.

acunn
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Re: Edward Jones Guided Solutions

Post by acunn » Wed Jan 04, 2017 4:59 pm

millennialfalcon wrote:The SIMPLE IRA account showed up today in my Accounts Overview page on Vanguard's site. It does not appear to have an account number just yet. I expect I will get confirmation of this new account soon and that it will be assigned an account number. Then, sometime after that, I expect to see the transfer from Edward Jones to Vanguard processed.

Patience grasshopper. This process absolutely takes a while. It will be worth it! Right about the time the first batch of money gets moved over, you are ready to start the paperwork for the next round. I was doing this quarterly but have dropped to every 6 months. Next round for you will be easier since all accounts are open. Be prepared in case EJ rejects the request at first. For me it was because "account less than 2 years old" however the custodian had changed so that was not correct and a phone call cleared it up. Good luck!!

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millennialfalcon
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Re: Edward Jones Guided Solutions

Post by millennialfalcon » Wed Jan 04, 2017 8:23 pm

acunn wrote:Patience grasshopper. This process absolutely takes a while. It will be worth it! Right about the time the first batch of money gets moved over, you are ready to start the paperwork for the next round. I was doing this quarterly but have dropped to every 6 months. Next round for you will be easier since all accounts are open. Be prepared in case EJ rejects the request at first. For me it was because "account less than 2 years old" however the custodian had changed so that was not correct and a phone call cleared it up. Good luck!!
Ha, I know you can feel my anxiety about this! Thanks for the encouragement (and for your earlier advice) and admonition to be prepared for hiccups. I will say I can rest easier knowing it is actually in progress at Vanguard however slowly. I can wait for the right thing to happen, so long as I know it is coming.

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millennialfalcon
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Re: Edward Jones Guided Solutions

Post by millennialfalcon » Fri Jan 20, 2017 1:53 pm

EJ has acknowledged receipt of Vanguard's transfer request. I got a call from the EJ rep this morning.

I will relate by way of paraphrase what I have been told about my request to be able to park my funds at EJ in some vehicle that will be free of fees:
Because this is a retirement plan account, you must participate in Guided Solutions (the program with an annual fee). You cannot invest in cash, and you cannot use just a money market fund. Even if you did, you would still be subject to the program fee.
Any thoughts on something I am not considering or something I should ask? I will be visiting with the EJ rep and someone from EJ who is supposedly able to provide guidance on how EJ is running this plan. I think worst case I am stuck with a minimum monthly fee of $10/month. I am inclined to take the $120 yearly hit, satisfied in the power that I can periodically move my contributions and employer matches to Vanguard.

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Re: Edward Jones Guided Solutions

Post by retiredjg » Sat Jan 21, 2017 1:47 pm

I've gone back through this thread and a couple of things are unclear to me.

1) Is your current SIMPLE IRA a 5304 or 5305? The discussion seems to indicate 5305 (employer designated financial institution) but I did not see where you actually said that. You should have some paperwork that you signed last October. At the top it will clearly state one number or the other. What kind is your company using for 2017?


2). In your original post, you indicated that the "new" plan is Advisory Solutions, not Guided Solutions. It appears you said that under Advisory Solutions, there can be no loads on the funds but there is an AUM fee of 1.3%. Then later, you posted a link to Guided Solutions and only talked about Guided Solutions as if it is the "new" plan. Help me out on this. Which is the plan that is going into effect under the new fiduciary rules? Guided Solutions or Advisory Solutions?

3). Is the "program fee" the same thing as the annual fee? Is it the same as the AUM fee of 1.3%?

4). Is there no money market fund available in this plan?

retiredjg
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Re: Edward Jones Guided Solutions

Post by retiredjg » Sat Jan 21, 2017 2:16 pm

I'm assuming that Guided Solutions is the one that counts. I looked back through the links and a couple of things popped up.

1). The money market is not on the list of "eligible" investments. You can use it prior to investing as a "sweep" fund. It is NOT subject to the AUM.

2). At this point, we don't know what the list of eligible investments looks like, but I found it interesting that they mentioned the "internal costs" (guessing this is ER or close) may be higher than your old funds. So perhaps they have traded Class A funds (front end load) to funds that have a higher ER in addition to the "program fee" which apparently is the AUM. If that is correct, that is just plain slimy.

So, take a look at the eligible investments list and tell us what looks best.

3). If your initial investment is less than $5k and if your account never gets higher than $5k, the monthly fee should be $4, not $10. If the account ever goes above $5k, the fee goes to $10 a month, even if the value later drops to lower than $5k.

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millennialfalcon
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Re: Edward Jones Guided Solutions

Post by millennialfalcon » Sat Jan 21, 2017 8:05 pm

retiredjg wrote:I've gone back through this thread and a couple of things are unclear to me.

1) Is your current SIMPLE IRA a 5304 or 5305? The discussion seems to indicate 5305 (employer designated financial institution) but I did not see where you actually said that. You should have some paperwork that you signed last October. At the top it will clearly state one number or the other. What kind is your company using for 2017?


2). In your original post, you indicated that the "new" plan is Advisory Solutions, not Guided Solutions. It appears you said that under Advisory Solutions, there can be no loads on the funds but there is an AUM fee of 1.3%. Then later, you posted a link to Guided Solutions and only talked about Guided Solutions as if it is the "new" plan. Help me out on this. Which is the plan that is going into effect under the new fiduciary rules? Guided Solutions or Advisory Solutions?

3). Is the "program fee" the same thing as the annual fee? Is it the same as the AUM fee of 1.3%?

4). Is there no money market fund available in this plan?
Thank you for going back and reviewing this.

1. It's a 5305. I have the paperwork with EJ branding on it indicating it is a model 5305 form automatically approved by the IRS.

2. I did conflate the two. It is Guided Solutions. Sorry about that.

3. The program fee is the AUM fee. It replaces an annual fee.

4. I'll respond to your second post about this.

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millennialfalcon
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Re: Edward Jones Guided Solutions

Post by millennialfalcon » Sat Jan 21, 2017 8:18 pm

retiredjg wrote:I'm assuming that Guided Solutions is the one that counts. I looked back through the links and a couple of things popped up.

1). The money market is not on the list of "eligible" investments. You can use it prior to investing as a "sweep" fund. It is NOT subject to the AUM.

2). At this point, we don't know what the list of eligible investments looks like, but I found it interesting that they mentioned the "internal costs" (guessing this is ER or close) may be higher than your old funds. So perhaps they have traded Class A funds (front end load) to funds that have a higher ER in addition to the "program fee" which apparently is the AUM. If that is correct, that is just plain slimy.

So, take a look at the eligible investments list and tell us what looks best.

3). If your initial investment is less than $5k and if your account never gets higher than $5k, the monthly fee should be $4, not $10. If the account ever goes above $5k, the fee goes to $10 a month, even if the value later drops to lower than $5k.
1. It is a pure sweep fund. As part of the Guided Solutions program, any funds in the MM are automatically invested into the eligible investments based on your risk profile (explained below). I asked the advisor point blank if I could just hold cash or MM, and was told that could never happen because it would never fit any investor profile to be 100% in cash or cash equivalents. I am incredulous at this.

2. I don't know what the eligible investments are either. In the brochure and documentation I have, there is no such list. I will request one. All I know is I've been automatically invested in 7 funds, which I believe is the maximum number I can be in given my account balance. I read in one of the brochures that there was a 7 fund maximum for accounts under a certain asset threshold.

3. Wouldn't you know this really screwed me? If I am stuck in this Guided Solutions program, I will always be subject to the 10 dollar fee, not the 4 dollar fee.

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millennialfalcon
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Re: Edward Jones Guided Solutions

Post by millennialfalcon » Sat Jan 21, 2017 8:24 pm

Also just to clarify: when I am referring to the fees in the Guided Solutions account, I am talking about the minimum monthly fees. My account is presently subject to minimums instead of a percentage based on AUM. The percentage can be as high as 1.5% per year for AUM. Obviously, for lower account balances like mine, the minimum fee is higher on a percentage basis than 1.5%

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Re: Edward Jones Guided Solutions

Post by retiredjg » Sat Jan 21, 2017 8:29 pm

millennialfalcon wrote:3. Wouldn't you know this really screwed me? If I am stuck in this Guided Solutions program, I will always be subject to the 10 dollar fee, not the 4 dollar fee.
Why? Have you already broken the $5k barrier?

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millennialfalcon
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Re: Edward Jones Guided Solutions

Post by millennialfalcon » Sat Jan 21, 2017 8:32 pm

retiredjg wrote:
millennialfalcon wrote:3. Wouldn't you know this really screwed me? If I am stuck in this Guided Solutions program, I will always be subject to the 10 dollar fee, not the 4 dollar fee.
Why? Have you already broken the $5k barrier?

Yes.

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Re: Edward Jones Guided Solutions

Post by retiredjg » Sun Jan 22, 2017 6:59 am

The $120 hit is unfortunate, but it appears you will pay that either way. The frozen SIMPLE at Vanguard is still a good option - at least you won't be paying high expense ratios in addition to the "program fee".

On the other hand....you said the new plan had institutional share class funds which should have very low ERs. Have you actually looked up the expense ratios of the new funds? In your first post, it is not clear if the .4% to .9% refers to your old funds or your new funds.

You do have a 3% match which probably pays at least as much as the $120. In fact, it might be worthwhile to save more than just enough to meet the match since you have to pay that $120 anyway.

Perhaps next year, the employer can be convinced to use the 5304 form and you can set up your own account at Vanguard.

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millennialfalcon
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Re: Edward Jones Guided Solutions

Post by millennialfalcon » Sun Jan 22, 2017 9:43 am

retiredjg wrote:On the other hand....you said the new plan had institutional share class funds which should have very low ERs. Have you actually looked up the expense ratios of the new funds? In your first post, it is not clear if the .4% to .9% refers to your old funds or your new funds.

You do have a 3% match which probably pays at least as much as the $120. In fact, it might be worthwhile to save more than just enough to meet the match since you have to pay that $120 anyway.
Thanks for your continued insight.

I will do some more investigation on the funds. I do want to know what the list of eligible investments is. Maybe I can create a one or two fund portfolio in this account.

With the match, I do have an easier time of viewing this as a sunk cost. I think one barrier was not understanding why I was automatically dropped into 7 funds, which I will be taking up with the EJ advisor if there is no MM option at all. I have the same TR fund in a rollover IRA and a Roth IRA both at Vanguard. I like the simplicity and low cost.

Also, I don't like the feeling of being captive. My sense of fairness is offended in knowing that this is a way people's retirements are slowly robbed of them. Cost to employer is low, sure, but it's absolutely at the expense of the employees.

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Re: Edward Jones Guided Solutions

Post by retiredjg » Sun Jan 22, 2017 9:55 am

It's a poor plan, but lots of people have poor plans. Time to make lemonade. :happy

It is very discouraging to me that new fiduciary rules allow this type of "solution". As far as EJ is concerned, I'm not sure the consumer is any better off. Looks to me like the gouging is just different, not better.

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millennialfalcon
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Re: Edward Jones Guided Solutions

Post by millennialfalcon » Sun Jan 22, 2017 10:05 pm

In what I will only assume is woeful incompetence on the part of EJ, they have charged my account their termination fee ($95) for having received Vanguard's request to transfer out the funds to Vanguard's SIMPLE IRA. From everything I have read on 5305 SIMPLE plans, this is verboten. IRS Notice 98-4 covers just this.

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Re: Edward Jones Guided Solutions

Post by retiredjg » Mon Jan 23, 2017 6:49 am

I think the notice talks about fees to transfer. I'm not sure that would include a termination fee.

I hope you can get this straight as there is clearly no intent to close although it probably looked like that is what you wanted. But I think I'd leave $100 each time you do the rollovers just to avoid having to fight this battle every time.

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Re: Edward Jones Guided Solutions

Post by acunn » Mon Jan 23, 2017 8:43 am

I agree. I always leave some money in there. With market ups and downs though and the length of time it takes for things to go through I am usually looking at a three week time frame give or take. So I take all but $500 out and then with my next contribution it adds a bit more cushion. Unfortunately that means $1000 or more that I don't get out each time but I never want this account to close and if the market drops and it goes to zero, it seems a convenient way for them to charge me $95.

I also agree that my 3% match helped to wrap my mind around the fees (load) associated with the old system.
Perhaps I have been grandfathered in and not required to participate in the guided solutions because this pattern of money market investing and my withdrawals has been going on well before all the others at the office met with him to sign guided solutions paperwork. EJ didn't meet with me.

Edit: thinking about what I just wrote I should cut down the amount I leave in quite a bit. I started doing that when I had things in their funds not mm. I should do exactly what retiredjd says now. All but a few dollars since mm more secure and that is where my funds are going.

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Re: Edward Jones Guided Solutions

Post by acunn » Mon Jan 23, 2017 9:23 am

one more thing- not sure if this will help.
The previous post prompted me to start another transfer. It was time anyway.
When I look at the account it lists my assists in "cash". Not money market. I don't know the significance of this for getting out of guided solutions but figured I would mention it in case you can have yours directed to "cash" since they are telling you no money market is available.

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millennialfalcon
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Re: Edward Jones Guided Solutions

Post by millennialfalcon » Mon Jan 23, 2017 12:48 pm

retiredjg wrote:I think the notice talks about fees to transfer. I'm not sure that would include a termination fee.

I hope you can get this straight as there is clearly no intent to close although it probably looked like that is what you wanted. But I think I'd leave $100 each time you do the rollovers just to avoid having to fight this battle every time.
So, they appear to be reading it the same way. If you ask for a full transfer, then they take the position they can levy a termination fee because to them full transfer = intent to close the account. Closing the account fee ≠ transfer fee. I think this is too fine a reading of this language from Notice 98-4:
A transfer is deemed to be made without cost or penalty if no liquidation, transaction, redemption or termination fee, or any commission, load (whether front-end or back-end) or surrender charge, or similar fee or charge is imposed with respect to the balance being transferred.
But, I suppose their position is supportable on such a very fine reading of "with respect to the balance being transferred."

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