Moving my mother's obscure funds to Vanguard

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sschoe2
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Moving my mother's obscure funds to Vanguard

Post by sschoe2 » Wed Apr 19, 2017 12:12 pm

I am looking to move my mother's accounts from RBC to Vanguard to simplify and reduce her risk. She has a vastly over complicated and under-performing portfolio with way too many fees. She is 73 and doesn't understand to much about investing other than she likes dividend checks. She rarely touches anything so she would have been perfect for index funds. She doesn't really live off any of this though she gets ~$5k in dividends and RMD from her IRA she lives off a pension $30k and Soc Sec $5k. I am also wondering if there is a one time advisor at Vanguard that she could pay to help decide which of this junk to lose (though I don't want to incur a huge tax bill and push her from the 15% to the 25% bracket) and which to leave for now.

Taxable ($75k total value)
4.19% "Cohen & Steers Quality Income Rlty Fd Inc" -RQI
15.20% "Duff & Phelps Utility &Corporate Bond Trust Inc &P N/R" -DUC
3.37%" Gabelli Equity Trust Inc" -GAB
0.28%" Gabelli Healthcare & Wellness Trust (The)" -GRX
0.32% Gabelli Utility Tr -GUT
0.41% General Motors Company (GM) -GM
9.65% Hcp Inc -HCP (shows $7258 gain)
0.21% Kaiser Aluminum Corporation -KALU
4.35% "Morgan Stanley Emerging Markets Debt Fund Inc S&P N/R"-MSD
10.69% "Nuveen Preferred Securities Income Fund Common Stock
S&P N/R" JPS (showing $5454 loss)
21.44% "Pimco Corporate & Income Strategy Fund S&P N/R" -PCN
1.17% "Quality Care Properties Inc Common Stock" -QCP
0.02% "Uts Motors Liquidation Company Guc Tr Units Of Beneficial
Interest" (she was a bag holder on $2500 of old GM bonds) -MTLQU
5.97% Verizon Communications -VZ
0.98% "Virtus Global Dividend & Income Fund Inc Com" -ZTR
2.94% "Western Asset Emerging Mkts Debt Fd Inc S&P N/R" -EMD
0.18% Wts General Motors Company -GMWSB
0.58% "Dunham Monthly Distribution Cl A" -DAMDX
18.02%Franklin Income Series Cl A -FKINX
"General Motors Corp 7.25% Sr Nts Due 2/15/52 Escrow Cusip Dtd 02/07/02" 370ESC758 (worthless)

IRA (total $45k)
7.9% "Alpine Global Premier Pptys Fd Shs Of Ben Int" AWP (showing $7790 loss)
58.4% Franklin Income Series Cl A FKINX
28.4% Vangaurd REIT Index ETF VNQ
5.3% "Wells Fargo Mortgage Backed 94982VAA4
Securities Tmtgpc/Series
2005-8 A-1-Fixed Rt
Cpn 5.500% Due 10/25/35
Dtd 09/01/05 Fc 10/25/05
Factor .11665409
Curr Bal 2,333.08
Moody Ba3 S&P N/A"

aristotelian
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Re: Moving my mother's obscure funds to Vanguard

Post by aristotelian » Wed Apr 19, 2017 12:40 pm

Try calling the current financial advisor and ask if they will liquidate at least the IRA for you. I had a similar situation with an inheritance for my kids, and the financial advisor took care of everything free of charge. Would have cost a lot more to have Vanguard do it.

It looks like most of the taxable holdings are bonds or bond funds, in which case there shouldn't be a huge tax hit. See if you can look at a recent statement or access the account online with her to see if there have been any big gains. If you sell the gainers at the same time as the ones with losses, the tax hit will offset. VZ, EMD, and MSD might be ones to check for large gains.

sschoe2
Posts: 121
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Re: Moving my mother's obscure funds to Vanguard

Post by sschoe2 » Wed Apr 19, 2017 12:52 pm

The current adviser won't do anything for free. There was $14k sitting there in the IRA for months (actually not sure how long) in cash and he just finally called and sold her the VNQ and charged a $879 2.4% commission. I suspect a lot of the stuff in there was a result of commissions being offered to the broker to sell it.

It is what $8 a trade at Vanguard? I'd rather do it there and cut ties.

Dottie57
Posts: 1980
Joined: Thu May 19, 2016 5:43 pm

Re: Moving my mother's obscure funds to Vanguard

Post by Dottie57 » Wed Apr 19, 2017 1:51 pm

sschoe2 wrote:The current adviser won't do anything for free. There was $14k sitting there in the IRA for months (actually not sure how long) in cash and he just finally called and sold her the VNQ and charged a $879 2.4% commission. I suspect a lot of the stuff in there was a result of commissions being offered to the broker to sell it.

It is what $8 a trade at Vanguard? I'd rather do it there and cut ties.



This is the type of advisor who should get into trouble.

sschoe2
Posts: 121
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Re: Moving my mother's obscure funds to Vanguard

Post by sschoe2 » Wed Apr 19, 2017 2:11 pm

Yea I have no idea how she ended up with so much REIT everywhere. I jokingly told her she was going to be a real-estate mogul like Trump. Though she took some major losses with the AWP and JPS but she made a good amount on the HCP. Still I am 36 think that is risky for her especially with the house as well.

TheJoker
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Location: Bellingham, Wa

Re: Moving my mother's obscure funds to Vanguard

Post by TheJoker » Wed Apr 19, 2017 2:26 pm

Talk to Vanguard for the best way to liquidate almost all of that junk except the VZ. I am 72 and have 80% of my assets in VDC (consumer staples ETF). There is a 2.5% yield paid quarterly and the value is up 7% year to date. It averages about 10% per year gain with nominal downside risk. Here is what I love about the low downside of consumer staples: If times get financially tuff, which would you give up first, tooth paste or ...........................toilet paper?

sschoe2
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Re: Moving my mother's obscure funds to Vanguard

Post by sschoe2 » Wed Apr 19, 2017 2:33 pm

Why leave the Verizon? I don't like that she has 6% of her taxable portfolio in one stock even if it is a large company that pays good dividends.

sschoe2
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Re: Moving my mother's obscure funds to Vanguard

Post by sschoe2 » Thu Apr 20, 2017 5:33 pm

I checked Vanguard's site. It states there is a $25 per fund administration charge for Vanguard mutual funds in a Simple Ira unless she is Voyager. Voyager is $50k

Her Ira is only $45k but her taxable is $75k. Will that qualify her for Voyager if she transfers both?

What about nonvanguard funds and securities?

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tractorguy
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Re: Moving my mother's obscure funds to Vanguard

Post by tractorguy » Thu Apr 20, 2017 5:50 pm

Voyager status is based on the total account. So if she transfers both, she should get it as soon as all of the money is there. When your mother gets Voyager status, Vanguard will charge you $7.00 to per transaction to sell this mess of junk if you do it through the web site. There will be no charge to buy any Vanguard product.

This group generally recommends Vanguard index funds or sometimes target date funds for investing. Vanguard has the most of these and is typically the lowest cost by a little bit. Fidelity and Schwabb also have low cost index funds that are good, but if you're going to buy them, I suggest you set up an account with the company who's funds you want to buy. Vanguard is going through significant growing pains right now. If you are at all interested in Fidelity or Schwabb, you might get better service for the next year or two from them. I put my mother in law into Fidelity because meeting with a person to do the transfer re-assured her that her money was actually going somewhere, not just "to the cloud."

Any of these brokerages will help pull the money from the RBC, no need to get the RBC broker involved except to tell him its going. One thing you should do is stop all dividend re-investments and tell him to stop all trades on this account immediately.

I don't know RBC but I expect that there will be an account closure fee if its like any of the other full service houses.
Lorne

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celia
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Re: Moving my mother's obscure funds to Vanguard

Post by celia » Thu Apr 20, 2017 6:01 pm

sschoe2 wrote:I checked Vanguard's site. It states there is a $25 per fund administration charge for Vanguard mutual funds in a Simple Ira unless she is Voyager. Voyager is $50k

Her Ira is only $45k but her taxable is $75k. Will that qualify her for Voyager if she transfers both?

What about nonvanguard funds and securities?

If you have/will be having agent authorization to make trades for her and move the funds, ask Vanguard if her assets combined with yours can qualify for Select status instead of Voyager. Yes, it is the total of the person's or family's assets that determines the status level at Vanguard. Also ask Vanguard if she can sell all those holdings after the account is moved to them. Some of them might have to be sold beforehand.

None of the sales in the IRA will impact her taxes. But sales in her taxable account do. You need to get the date(s) of purchase and cost (basis) for each holding so you can determine which assets to sell each year so she doesn't get pushed into another tax bracket. Then you also need to understand her tax returns and the tax brackets to decide how much to sell. If you file as Married and she is Single, don't forget that she uses the Singles brackets which are about half of yours. And it is the line 43 Taxable Income that is compared to the tax brackets, not her AGI.

As far as the account transfers, just let Vanguard "pull them" from the current custodian. There's no need to talk to them if you don't want to. Just be sure you already have the purchase information on hand.

sschoe2
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Re: Moving my mother's obscure funds to Vanguard

Post by sschoe2 » Thu Apr 20, 2017 6:09 pm

I'm aware though I have access to her RBC website account and some of the stuff shows the cost basis and some says N/A and has none. However some of the funds she has have huge losses so I can dump them along with ones with big gains.

However, most of her stuff is dividend stocks and funds so it doesn't change too much in NAV.

I can't do select my assets are $230k and hers total are $115k so not quite to $500k
Last edited by sschoe2 on Thu Apr 20, 2017 6:12 pm, edited 1 time in total.

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AllieTB1323
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Location: Desert Washington State

Re: Moving my mother's obscure funds to Vanguard

Post by AllieTB1323 » Thu Apr 20, 2017 6:10 pm

From experience I can say RBC will charge an account closure fee but it is money well spent.

jasg
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Re: Moving my mother's obscure funds to Vanguard

Post by jasg » Tue Apr 25, 2017 4:34 pm

There ought to be a law...

My mom was in the same boat, an 'advisor' recommended by 'someone at church' sold her into a bunch of high-fee front-loaded funds and a variable annuity that worked out very well for HIM. $500k that barely budged in 10 years because every time he changed firms, he sold and re-bought. I dumped it all in December. She still has a capital loss carry forward.

I moved her into 50% Wellesley and Wellington. Very happy now.

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nedsaid
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Re: Moving my mother's obscure funds to Vanguard

Post by nedsaid » Tue Apr 25, 2017 5:43 pm

BhamETFs wrote:Talk to Vanguard for the best way to liquidate almost all of that junk except the VZ. I am 72 and have 80% of my assets in VDC (consumer staples ETF). There is a 2.5% yield paid quarterly and the value is up 7% year to date. It averages about 10% per year gain with nominal downside risk. Here is what I love about the low downside of consumer staples: If times get financially tuff, which would you give up first, tooth paste or ...........................toilet paper?


I would caution you that you aren't the only person out there who discovered what you did. Low volatility and nice dividends. The problem is that investors piled into these type of stocks, your ETF might be more expensive when you look at valuation measurements than the broad market itself. Low volatility is a well known story and investors chased dividend yield like you would not believe. Don't be shocked if you see disappointing returns in the future. So far, so good. Don't get complacent about downside risk, these things got bid up. Not a mania like the internet and high tech stocks in the 1990's but there was a lot of buying of these things. There is more downside risk here than you think.

Around the first of the year, I bought shares of Coke. The stock wasn't cheap but I held my nose and bought anyway. Other consumer staples stocks I looked at were not cheap either no was the ETF.
A fool and his money are good for business.

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nedsaid
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Re: Moving my mother's obscure funds to Vanguard

Post by nedsaid » Tue Apr 25, 2017 5:45 pm

sschoe2 wrote:Yea I have no idea how she ended up with so much REIT everywhere. I jokingly told her she was going to be a real-estate mogul like Trump. Though she took some major losses with the AWP and JPS but she made a good amount on the HCP. Still I am 36 think that is risky for her especially with the house as well.


It was yield chasing pure and simple. People noticed that in the aftermath of the 2008-2009 financial crisis that we saw very low interest rates. Everyone and their brother chased hard anything resembling yield and REITs were no exception. Your mom wanted yield and the advisor delivered.
A fool and his money are good for business.

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