Advice for moving from financial advisor

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Rmats
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Advice for moving from financial advisor

Post by Rmats » Sun Mar 19, 2017 11:39 pm

Newly married and able to convince my wife to move her assets away from her financial advisor. She was paying 1.25% AUM to hold funds with basis points between 70-120 at an allocation of 70% bonds (she's 37). I've always held my accounts at Vanguard and nearly gagged when I saw what she was paying and her AA. We've got the accounts all set up and the transfer to Vanguard initiated. For folks who have experience in transferring funds, is there anything that needs to be done after the transfer is complete to finalize the transition and cut ties with the financial advisor? They are aware of the transfer and have been professional about it but any tips or things to look out for? For reference, we are moving to a three fund portfolio 73/27 equity/bond, 20% international. Thanks in advance!

daveydoo
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Re: Advice for moving from financial advisor

Post by daveydoo » Mon Mar 20, 2017 12:58 am

Mostly for a bump: make sure it all came over, and if it didn't transfer "in kind," you'll need to reinvest when you get it there. It's helpful to know ahead of time what kind of account closure/transfer fees you'll be up against. And they may try to sell all and make sales commissions as a parting gift. I would ask ahead of time so you can plan -- or yell -- accordingly. Also, if these are not all vanilla investments, consider asking Vanguard if they will hold those securities and those share classes. If not, they will be sold on transfer and your timing may be inopportune vis-a-vis capital gains, etc.

Edited to say: congrats on your marriage!

krow36
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Re: Advice for moving from financial advisor

Post by krow36 » Mon Mar 20, 2017 1:22 am

Rmats wrote:Newly married and able to convince my wife to move her assets away from her financial advisor. She was paying 1.25% AUM to hold funds with basis points between 70-120 at an allocation of 70% bonds (she's 37). I've always held my accounts at Vanguard and nearly gagged when I saw what she was paying and her AA. We've got the accounts all set up and the transfer to Vanguard initiated. For folks who have experience in transferring funds, is there anything that needs to be done after the transfer is complete to finalize the transition and cut ties with the financial advisor? They are aware of the transfer and have been professional about it but any tips or things to look out for? For reference, we are moving to a three fund portfolio 73/27 equity/bond, 20% international. Thanks in advance!

It's a good idea to know the fees to sell a funds in both the old outfit and at Vanguard. Maybe you've already converted the funds to cash? Do the accounts include a taxable account? If so, do you have long and short term capital gains on each fund? They will no doubt take out a closing fee from each account, probably around $100. After the transfer and you've paid the account closing fees, I don't think you need do to anything more to cut the ties. :happy

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Bogle_Feet
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Re: Advice for moving from financial advisor

Post by Bogle_Feet » Mon Mar 20, 2017 3:50 am

Wow these financial advisors are just criminals. 1.25 + 1% (average) = 2.25%. That will shave over 20% off of an account value after only 10 years! Or 36% after 20 years. Or 49 1/2% after 30 years.

Call up E Trade, AmeriTrade or Vanguard. They will help you through the process.

Be sure to remove this advisor's name off all of your statements. Keeping their name on there may entitle them to trailer commissions of perhaps 1/4% per year. Don't reward them for ripping her off.

mikejomike
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Re: Advice for moving from financial advisor

Post by mikejomike » Mon Mar 20, 2017 6:53 am

I've never transferred a taxable account, but if you transfer in kind, will all basis information be transferred as well? I'm looking to get away from our FA, but there is still some uncovered holdings that I'm not sure how they will be handled. I have to investigate as to whether or not I'm up for tracking don the basis, so this is the first thing that came to mind when I saw this question.

livesoft
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Re: Advice for moving from financial advisor

Post by livesoft » Mon Mar 20, 2017 7:03 am

Yep, make sure you all have great records of all transactions at the old place … because once you terminate the relationship it may be difficult to get information. And next year expect to get 1099s from the old place, so make sure they have your correct address still at that time.
This signature message sponsored by sscritic: Learn to fish.

Rmats
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Re: Advice for moving from financial advisor

Post by Rmats » Mon Mar 20, 2017 9:42 am

Thanks for everything so far. To clarify, everything is coming over in kind and almost all in a taxable account. I've got all transfer information as far as initial purchase times and most everything is under long term. Not sure what fees are like, thankfully it looks like there is no back end load. The transferring brokerage SEI does not make it easy to tell what the tax implications are, but for a good number of these there is an unrealized loss. Basically the high allocation to bonds wipes out most of the gains in equities. She had a 2016 Q4 net loss, that in addition to fees :oops: . My plan is to wait till the transfer comes through, verify they are off, then sell everything and reallocate. It's gonna be painful to lock in those losses on the bond side and we'll take a long term gain of about $30k for this year, but I figure the sooner we get the expenses down the better. Maybe not the best time to be rebalancing, but I guess it's good practice for sticking to our plan.

I'll follow up with Vanguard to make sure the cord is cut. Can't wait to be rid of these guys. We had a video conference call with them a few weeks ago and they were showing photos of family/kids etc. They definitely know how to set their roots (tentacles?).

Vanguard Fan 1367
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Re: Advice for moving from financial advisor

Post by Vanguard Fan 1367 » Mon Mar 20, 2017 10:09 am

I am glad that your wife went along with the change. I have some friends who don't seem so excited about my Vanguard recommendations. It is pretty easy to look at the 1 percent fee that the advisor often charges plus the loads plus the expense ratios on the funds themselves and think, that is nothing. But it really adds up over the years.

deltaneutral83
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Re: Advice for moving from financial advisor

Post by deltaneutral83 » Mon Mar 20, 2017 10:12 am

Rmats wrote: She had a 2016 Q4 net loss, that in addition to fees :oops:

Do what? How did that happen?

pkcrafter
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Re: Advice for moving from financial advisor

Post by pkcrafter » Mon Mar 20, 2017 10:29 am

Rmats, sounds like everything is on it's way to Vanguard, and as I understand it, you are transferring a tax-advantaged account and a taxable account.Were assets sent directly to Vanguard?

First off, I hope this does not get messed up because of sending two different accounts at one time. Second, have you confirmed that Vanguard can deal with all the funds you've transferred? If not, they won't get transferred.

Regarding your wife's assets, was she at a low equity allocation because she requested it? Risk averse? If so, you need to respect that when redoing the portfolio.

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

Rmats
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Location: CA Bay Area

Re: Advice for moving from financial advisor

Post by Rmats » Mon Mar 20, 2017 11:02 am

pkcrafter wrote:Rmats, sounds like everything is on it's way to Vanguard, and as I understand it, you are transferring a tax-advantaged account and a taxable account.Were assets sent directly to Vanguard?

First off, I hope this does not get messed up because of sending two different accounts at one time. Second, have you confirmed that Vanguard can deal with all the funds you've transferred? If not, they won't get transferred.

Regarding your wife's assets, was she at a low equity allocation because she requested it? Risk averse? If so, you need to respect that when redoing the portfolio.

Paul


Like kind transfer to Vanguard. The account holdings are all mutual funds so I don't anticipate problems. I've been working with the concierge service at a Vanguard and they've been great thus far. Very much hope there won't be issues.

She is more risk averse and we've had the discussion about allocation. I've been using Vanguard target retirement AA of 90/10 so far and our current allocation is a compromise in the middle where we can both be comfortable. She likes the idea of owning age -10 in bonds and rebalancing as we get closer to retirement. We have quite a while to let these funds grow and the BH books were very helpful in making her feel more comfortable.

pkcrafter
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Re: Advice for moving from financial advisor

Post by pkcrafter » Mon Mar 20, 2017 12:06 pm

Great! Sounds like you're doing everything right. Let us know how the transfer goes.

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

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