Surrender Charges (Prudential) and account with Edward Jones

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InquiringMind
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Joined: Fri Feb 16, 2018 5:07 am

Surrender Charges (Prudential) and account with Edward Jones

Post by InquiringMind » Fri Feb 23, 2018 11:06 am

This is my first post here. I want to say "thank you" for so much sound advice that I have been reading over the last couple of months. I found bogleheads after several "red flags" came up on our Ed. Jones statements and literature. I began to investigate fees, "grandfathering," court outcomes and buckled down to study it all this winter. We've only been with them for close to 3 years, after reaching a retirement goal. We thought it would be great to have an "advisor" and friend in a full service brokerage, intending to protect our investment. We were under-educated, but no more. So thank you all.

Of our 401k, 1/3 went into an annuity and 2/3 went into a traditional IRA with "Advisory Solutions". The performance on the 2/3 was horrific and the fees kept coming, nonetheless. The 2/3 is now transferred to Fidelity...thank God. (As a side-note, I asked our Fidelity intake guy "nicely" about paying our transfer fee from Edward Jones, and about a sign-up bonus. Thanks to bogleheads, that question blessed us with $595!).

The remaining 1/3 is sizable and is in an annuity with Prudential, sold by our Edward Jones "advisor." I have spent hours and hours sniffing out every fee that I can find. Yesterday I found a HIDDEN fee. Prudential has our $ invested in two mutual funds, one of which charged a front-end load of 5.5%. There is also a high expense ratio. (MORE FEES.). When I did the math on that ONE fund, I realized how much was taken as a load, then realized why the fund itself earned a great return of 19% for a particular period, but we received a MEASLY "guaranteed return". We are paying fees everywhere I turn and that is one that we never saw since it is buried in the low return rate. I thought the up-front commissions and annual fees were bad enough but with that last one included and the ONGOING fees slapped on monthly, I am astounded and horrified. In under 3 years time, those fees have added up to the price of our own home mortgage before we paid it off. I use that as a comparison, knowing how long and hard we worked to pay off a mortage. This made me SAD.

My question is this...Does ANYONE know of a way to get out of annuity contract WITHOUT paying the surrender charges? Our contract began in April of 2015 and I think the annual contract date is the 22nd. Our surrender charges will be $8,000 this year (3rd year) and at year 4, they will be half that amount. I still want out now as our annual fees are over $5,000. I dont know if year 4 BEGINS after April and we can get out paying the smaller fee? We will have COMPLETED our third year in April. I want OUT ASAP. We can make up the losses by choosing our own investments, I am sure.

Meanwhile...My hubby will be handing over the LONG LIST of fees and their various names, to our "advisor" who happens to be a family friend! Awkward but doable.

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David Jay
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Re: Surrender Charges (Prudential) and account with Edward Jones

Post by David Jay » Fri Feb 23, 2018 8:06 pm

It is probably worth waiting 2 months to drop the surrender fee. It will cost you more than the surrender fee to keep this high cost policy in place for a full additional year.

The surrender fee is there to cover the commission paid to the salesperson (8% commission is typical). Since the commission was paid immediately, the insurance company needs to either keep the policy in place for many years or else charge a surrender charge to “recoup” the commission.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

InquiringMind
Posts: 2
Joined: Fri Feb 16, 2018 5:07 am

Re: Surrender Charges (Prudential) and account with Edward Jones

Post by InquiringMind » Fri Mar 16, 2018 5:58 pm

I learned that we are a year away from the surrender date so we still have fees. We are very happy to lose some $ in exchange for the freedom to invest that sum as we please. The total fees for the year make the decision much easier.

I hope that more and more people read about their practices and avoid the problems and huge expenses of dealing with this company. I don't even want to think of the grand total of how much they have cost us with service and investment choices that are unimpressive.

I was stunned when I learned that Edward Jones was listed as "co-owner" of our annuity, with my spouse. Their "co-ownership" is slowing down the process of surrendering the contract and delaying our investment of these funds in a Fidelity account that we have and are happy with.

Can anyone tell me what our legal rights are, in regard to their delay in processing our paperwork? We want this to be finished but it is taking longer than it should. I say that based on my conversation with the insurer who issued the annuity contract.

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