edward jones guided solutions/grandfathered

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eda1836
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edward jones guided solutions/grandfathered

Post by eda1836 »

I'm going to talk with my EJ advisor next week but if someone could explain this new fee based policy to me in easy, layman's terms so I'll know what questions to ask her I'd appreciate. I have 3 retirement accounts with EJ: a traditional IRA with about $170,000 in it and 2 Roths (one for me and one for my wife) with one having $30,000 and the other $11,000. I met with her a few months ago and she did explain the new fee based concept to me, but I guess I just didn't realize how much it was going to cost me. I've noticed for the past 5 months after our meeting I am getting trade confirmation alerts out of my traditional account. It happens around the 10th of the month and one fund is sold to get about $180 out of it. On my history it just says program fee. So is this what it's going to cost me per month for this new service? Was I paying that before and just didn't notice? I don't know, it just seems like these trade alerts just started popping up once a month that didn't happen before the change. So I'm going to pay over $2000/year just in the traditional IRA?
Then I get an email saying that my Roth was being grandfathered. What does that mean exactly? If I do nothing then after June 9th I cant put money into that account unless I change to this new service and then they are going to charge me for this account also? I AM NOT a financial guru but I just can't see spending that kind of money and only talking to the rep once a year. Vanguard told me they had a financial advisor service if I wanted it and would only cost about $600 per year. Anyway, I'm seriously thinking of switching to Vanguard or even moving the money to my employer sponsored 401(b) plan. Any advice or explanations to help me better understand this new fee structure would be appreciated. Thanks.
RadAudit
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Re: edward jones guided solutions/grandfathered

Post by RadAudit »

Welcome to the forum

Look here viewtopic.php?t=218680 The thread has a few links that might be of help.
Last edited by RadAudit on Fri May 12, 2017 5:27 pm, edited 1 time in total.
FI is the best revenge. LBYM. Invest the rest. Stay the course. Die anyway. - PS: The cavalry isn't coming, kids. You are on your own.
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Duckie
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Re: edward jones guided solutions/grandfathered

Post by Duckie »

eda1836, welcome to the forum.
eda1836 wrote:Anyway, I'm seriously thinking of switching to Vanguard or even moving the money to my employer sponsored 401(b) plan. Any advice or explanations to help me better understand this new fee structure would be appreciated.
The Department of Labor updated the Fiduciary Rule in 2016. It will take effect on June 9, 2017. To comply, Edward Jones set up a plan to switch all accounts over to Assets Under Management (AUM) instead of their commissions/fees. For a lot of their customers AUM will cost more.

Move your IRAs to Vanguard or Fidelity. Get away from Edward Jones.
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catdude
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Re: edward jones guided solutions/grandfathered

Post by catdude »

Duckie is right. Lose Edward Jones ASAP.
catdude | | All generalizations are false, including this one.
bayview
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Re: edward jones guided solutions/grandfathered

Post by bayview »

eda1836 wrote:I'm going to talk with my EJ advisor next week but if someone could explain this new fee based policy to me in easy, layman's terms so I'll know what questions to ask her I'd appreciate. I have 3 retirement accounts with EJ: a traditional IRA with about $170,000 in it and 2 Roths (one for me and one for my wife) with one having $30,000 and the other $11,000. I met with her a few months ago and she did explain the new fee based concept to me, but I guess I just didn't realize how much it was going to cost me. I've noticed for the past 5 months after our meeting I am getting trade confirmation alerts out of my traditional account. It happens around the 10th of the month and one fund is sold to get about $180 out of it. On my history it just says program fee. So is this what it's going to cost me per month for this new service? Was I paying that before and just didn't notice? I don't know, it just seems like these trade alerts just started popping up once a month that didn't happen before the change. So I'm going to pay over $2000/year just in the traditional IRA?
Then I get an email saying that my Roth was being grandfathered. What does that mean exactly? If I do nothing then after June 9th I cant put money into that account unless I change to this new service and then they are going to charge me for this account also? I AM NOT a financial guru but I just can't see spending that kind of money and only talking to the rep once a year. Vanguard told me they had a financial advisor service if I wanted it and would only cost about $600 per year. Anyway, I'm seriously thinking of switching to Vanguard or even moving the money to my employer sponsored 401(b) plan. Any advice or explanations to help me better understand this new fee structure would be appreciated. Thanks.
Welcome to Bogleheads!

You will be much more prepared to control your finances if you read the resources here in the forum wiki: https://www.bogleheads.org/RecommendedReading.php Many are available at your local library or pretty cheap via Kindle or used books.

Another good reading list is contained in Bill Bernstein's "If You Can." Although it is written for young people (younger than me, anyway! :D), it is a great, blunt, clear, uncompromising but compassionately understanding discussion of investing and retirement savings: https://www.amazon.com/If-You-Can-Mille ... if+you+can (free with Kindle unlimited or Amazon Prime, otherwise a whopping $5.99)

I don't know about you, but I'd rather screw up my investing all by myself than pay someone a good chunk of my hard-earned savings to screw it up for me.

Best of luck, and be sure to read the posts about Edward Jones. You can also do a lot of Googling to find out the sad and sorry truth. Their marketing strategy, simply put, is to be your everyday neighbor, attending your house of worship, playing golf on the same golf course, members of the local PTA, who want to help you with your investments. And many of their advisors completely believe that they are giving you great service. After all, the best salespeople are those who believe their own sales pitches. Plenty of nice people, but sadly mislead. Or of course, completely aware of the scam and not perturbed at all.

“It is difficult to get a man to understand something, when his salary depends on his not understanding it.” --Upton Sinclair.
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri
Dottie57
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Re: edward jones guided solutions/grandfathered

Post by Dottie57 »

You can also skip the Vanguard service and just use their funds. If you can read and do basic math you can manage your own money.

Here is the link to a simple 3 fund portfolio. It is used by many in this forum. Your big dcision will be the percentage to put in each fund. Do the necessary reading - it will serve you well.

https://www.bogleheads.org/wiki/Three-fund_portfolio
krow36
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Re: edward jones guided solutions/grandfathered

Post by krow36 »

The EJ Guided Solutions fees: https://www.edwardjones.com/images/guid ... f-fees.pdf
EJ on fees for your IRAs: https://www.edwardjones.com/images/ira- ... f-fees.pdf

If your EJ GS total balance is about 200k, it looks like your Program Fee will be close to 1.35%. That works out to $2700 per year, plus the $40 per year per IRA account. If you move your accounts to Vanguard and use their advisory service for 0.3%, you would pay $600 per year and be able to buy index funds with very low expense ratios. This decision should not be difficult for you. Ask questions here if something isn’t clear. :happy
Topic Author
eda1836
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Re: edward jones guided solutions/grandfathered

Post by eda1836 »

Thanks for the responses. I do have a Fidelity account. Its an individual taxable account that I invest a little money in. I called Fidelity and a rep will call me back next week. I am looking at just rolling it all over to a target retirement fund in Vanguard. Their expense ratio was 0.16% compared to Fidelity's 0.76% in their target fund. I'd like to just roll it over to fidelity just for convenience but it looks like Vanguard is just a lot cheaper. I know cheaper isn't necessarily better but if I'm just going to park the money in a target fund why not go with the one with the cheaper ER? If anybody else has any other advice or opinions I'd love to hear them.
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Nate79
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Re: edward jones guided solutions/grandfathered

Post by Nate79 »

eda1836 wrote:Thanks for the responses. I do have a Fidelity account. Its an individual taxable account that I invest a little money in. I called Fidelity and a rep will call me back next week. I am looking at just rolling it all over to a target retirement fund in Vanguard. Their expense ratio was 0.16% compared to Fidelity's 0.76% in their target fund. I'd like to just roll it over to fidelity just for convenience but it looks like Vanguard is just a lot cheaper. I know cheaper isn't necessarily better but if I'm just going to park the money in a target fund why not go with the one with the cheaper ER? If anybody else has any other advice or opinions I'd love to hear them.
You have to be careful with Fidelity because they have both high and low expense ratio funds. If you search for the Target date funds called Freedom INDEX funds you will find their expense ratio is very low. What you found I believe were just their Freedom mutual funds which have higher expense ratios.
Topic Author
eda1836
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Re: edward jones guided solutions/grandfathered

Post by eda1836 »

:happy Yes, I see the index funds now and they are a lot cheaper. Thank you.
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retiredjg
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Re: edward jones guided solutions/grandfathered

Post by retiredjg »

Since you already use Fidelity and didn't express any displeasure there, I'd move the money to Fidelity. Invest in an Index Target Fund, not the higher cost ones. Do not pick the target fund by the date in the name - pick the fund that has a stock to bond ratio you think is appropriate.

Do not be surprised if EJ charges you a fee to close each account. Just pay it knowing that you will be saving a couple thousand dollars each year as the result of the move. Not only will you be out from under the high AUM fee, you will be using lower cost funds in addition to that.

Edward Jones' solution to the pending fiduciary rule has been eye-opening and a bit shocking. The rule was supposed to improve things for customers, but nothing has improved at EJ. The costs are just more obvious or the costs are higher, hard to say which. Either way, we've heard from a slew of EJ customers who are fleeing the fees. You are smart to be one of them.

If you want to see what others have had to say, just type Edward Jones into the google box above and you will find some interesting discussions about this "Guided Solutions" fiasco.
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nedsaid
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Re: edward jones guided solutions/grandfathered

Post by nedsaid »

eda1836 wrote:Thanks for the responses. I do have a Fidelity account. Its an individual taxable account that I invest a little money in. I called Fidelity and a rep will call me back next week. I am looking at just rolling it all over to a target retirement fund in Vanguard. Their expense ratio was 0.16% compared to Fidelity's 0.76% in their target fund. I'd like to just roll it over to fidelity just for convenience but it looks like Vanguard is just a lot cheaper. I know cheaper isn't necessarily better but if I'm just going to park the money in a target fund why not go with the one with the cheaper ER? If anybody else has any other advice or opinions I'd love to hear them.
Fidelity offers Fidelity Freedom Index funds too. You can choose either the active or indexed version of their Freedom funds. Check it out.
A fool and his money are good for business.
CnC
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Re: edward jones guided solutions/grandfathered

Post by CnC »

Fidelity actually will pay you to close your Ed Jones account. I am breaking up with my Ed Jones broker today and I already spoke with Fidelity, they will pay up to $80 in closure costs when I switch over.
:beer

If you go with Fidelity I suggest you invest your "stock money" in FUSVX s&p 500 index with .045% er it's very low for a mutual fund.
bloom2708
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Re: edward jones guided solutions/grandfathered

Post by bloom2708 »

Don't let on to your Edward Jones "adviser" that you are thinking about a Do It Yourself plan with Vanguard. They will spin tall tales, provide false examples and tout their performance. They will bash index funds as "average" and, well, you can't convince them they are wrong. Your fees are their income. They depend on you paying lots and lots of fees.

It is all junk. In the end, the fees, front end sales loads, 12b-1 fees, back end sales loads, advisory fees and AUM fees are very expensive.

Read, learn, plan to exit. Once your eyes are "open" to the fees and how they impact your return, you cannot close them.

There are many good "I am leaving Edward Jones" threads if you search.
yogachick22
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Re: edward jones guided solutions/grandfathered

Post by yogachick22 »

Eda, you are lucky your advisor told you about the changes a few months ago. I didn't know until I got a letter a week ago. Nice. They give me 3 weeks to figure out what to do. I honestly believe my advisor expects me to do nothing. But it's time to put my Big Girl Boots on and read up on stuff because I no longer want to stay with Edward Jones. I had a 401-K with my job and rolled it over into Edward Jones years ago. I'm 64 now and so a lot of 'investing for the long run' info may not pertain to me, although I do hope to live another 20 years or so. It's just figuring out where to put my money until I have to start pulling it out 6 years down the road. One thing that isn't mentioned in the letter they sent me: Will all the grandfathered mutual fund accounts be subjected to this 1% fee? I refused to sign up for their Advisory Solutions plan, but it sounds like this fee will be forced on all grandfathered accounts??
acunn
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Re: edward jones guided solutions/grandfathered

Post by acunn »

yogachick22 wrote:Eda, you are lucky your advisor told you about the changes a few months ago. I didn't know until I got a letter a week ago. Nice. They give me 3 weeks to figure out what to do. I honestly believe my advisor expects me to do nothing. But it's time to put my Big Girl Boots on and read up on stuff because I no longer want to stay with Edward Jones. I had a 401-K with my job and rolled it over into Edward Jones years ago. I'm 64 now and so a lot of 'investing for the long run' info may not pertain to me, although I do hope to live another 20 years or so. It's just figuring out where to put my money until I have to start pulling it out 6 years down the road. One thing that isn't mentioned in the letter they sent me: Will all the grandfathered mutual fund accounts be subjected to this 1% fee? I refused to sign up for their Advisory Solutions plan, but it sounds like this fee will be forced on all grandfathered accounts??
From what I have read, the grandfathered accounts can continue with the old expense ratio ongoing without paying the AUM fee on those BUT you can not make new purchases into that account. The expense ratio of anything you have at EJ will be higher than index funds elsewhere.
krow36
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Re: edward jones guided solutions/grandfathered

Post by krow36 »

yogachick22 wrote: It's just figuring out where to put my money until I have to start pulling it out 6 years down the road.
yogachick22, welcome to the forum! As acunn mentioned, you will reduce you costs significantly if you move from EJ to one of the low-cost index fund providers such as Fidelity, Vanguard or Schwab. Your expense ratios at EJ are probably between 0.5% and 1.0%, or more. The ERs of the basic index funds at those 3 providers are about 0.05% to 0.15%. There is no tax cost to moving your IRA funds.

The fact that you plan to start distribution in 6 years shouldn't be a factor in your decision to move your account. Regardless of whether you can keep your old expense ratios, the decision should be based on whether you want to continue to give EJ an unnecessary 1% per year or more of your balance.

The move is made by calling the receiving institution and filling out their forms. Once your new account is set up, and they have your transfer request forms, the new institution contacts EJ and your accounts are moved. You may participate in a 3-way phone call between the EJ head office and the new institution. Your EJ rep is not involved in the move and will not be surprised that EJ is loosing another client to a low-cost providor.

edit: I didn't see your new thread. Good idea.
baritone
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Re: edward jones guided solutions/grandfathered

Post by baritone »

Voice of experience: leave EJ, do not look back. Don't even waste time estimating how much money you lost with their scheme. I did it and still grit my teeth and use bad words. It's not that EJ reps lie to you. It's just that they are disingenuous. If you could give them truth serum, they would say " I can make you some money OK, but if you invest your stash with Vanguard or Fidelity, they could make you quite a bit more". My former EJ guy had several nice vacations all over the world and bought a really nice house and he's not a lot older than my grandkids.
yogachick22
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Re: edward jones guided solutions/grandfathered

Post by yogachick22 »

Thanks for the info krow36 and acunn. Yes, I started a new topic because I realized I was crashing eda1836's. :wink:
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