Unique EJ situation
Unique EJ situation
Hoping for some advice on a unique circumstance. This is in a taxable account and all investments are gifted. If we move money out of EJ the gifts will stop.
A portion of our investments (25% ~ 70k) are unfortunately within Edwards Jones. As many of you know that means a 5.75% front load on their American Funds. I've been debating if it's better to just give in and continue with American funds or start buying vanguard within EJ since in the long run I'm going to pull everything out of EJ over to vanguard.
The purchase fees even out at about 1k. They charge 5% for external ETFs at 1k invested. The really bad part is they also charge 2% on dividends.
The American funds (ANWPX) have done well for us, so the debate is whether to eat the load fee and higher ER until I can pull out since there's no fee on the dividends with the AF.
Appreciate any/all help!
A portion of our investments (25% ~ 70k) are unfortunately within Edwards Jones. As many of you know that means a 5.75% front load on their American Funds. I've been debating if it's better to just give in and continue with American funds or start buying vanguard within EJ since in the long run I'm going to pull everything out of EJ over to vanguard.
The purchase fees even out at about 1k. They charge 5% for external ETFs at 1k invested. The really bad part is they also charge 2% on dividends.
The American funds (ANWPX) have done well for us, so the debate is whether to eat the load fee and higher ER until I can pull out since there's no fee on the dividends with the AF.
Appreciate any/all help!
Last edited by scsu74 on Sun Dec 05, 2021 9:43 am, edited 1 time in total.
- arcticpineapplecorp.
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Re: Unique EJ situation
i wouldn't direct any NEW money to EJ. I wouldn't buy Vanguard funds through EJ if it's going to cost to do so.scsu74 wrote: ↑Sun Dec 05, 2021 9:32 am Hoping for some advice on a unique circumstance. A portion of our investments (25% ~ 70k) are unfortunately within Edwards Jones. As many of you know that means a 5.75% front load on their American Funds. I've been debating if it's better to just give in and continue with American funds or start buying vanguard within EJ since in the long run I'm going to pull everything out of EJ over to vanguard.
The purchase fees even out at about 1k. They charge 5% for external ETFs at 1k invested. The really bad part is they also charge 2% on dividends.
The American funds (ANWPX) have done well for us, so the debate is whether to eat the load fee and higher ER until I can pull out since there's no fee on the dividends with the AF.
This is in a taxable account and all investments are gifted. If we move money out of EJ the gifts will stop.
Appreciate any/all help!
Open a brokerage acct with Vanguard or Schwab or Fidelity if you want to buy Vanguard funds, but buy the ETFs if going with the latter two to avoid the fees to buy Vanguard investments.
Once you do that, you might feel more inclined to move your monies from EJ to whatever brokerage you opened.
However, realize that if you sell a fund at EJ you could be looking at cap gains, so you have to understand the tax implication of switching funds. If you're able to move the funds in kind to another brokerage there shouldn't be a taxable event, but EJ will likely charge you a fee to close the acct with them.
if you reinvest dividends does that cause a 5.75% load to be incurred? If so, I would direct dividends to cash instead. You should generally do that anyway in a taxable acct in the event you have a tax loss harvesting opportunity.
can you tell us more about the "gifting" part? It doesn't matter that the EJ money was gifted to you (in the past), but what do you mean by the gifts will stop if you close the EJ acct?? Can't gifts be made to another acct? What's the deal with that?
Last edited by arcticpineapplecorp. on Sun Dec 05, 2021 9:39 am, edited 1 time in total.
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Re: Unique EJ situation
Instead of buying Vanguard funds within Edward Jones, why not open up a separate Vanguard account and buy the Vanguard funds there? You could make all new contributions (that are not gifted money) to Vanguard instead of to Edward Jones. You could deal with the problem of your American Funds later.
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Re: Unique EJ situation
You should lead with this statement or people will not get past the EJ mention.
What's the lowest cost option with the best tax efficiency and the ability to do a future transfer out?
Re: Unique EJ situation
Thank you, I put that at the front. I'm guessing transfer in kind to vanguard when possible. There isn't a fee to transfer out. I guess my biggest question is if I'll make more in the short term with the AF since the dividends for those aren't charged a fee. Ideally I'd just buy all VTI within EJ since that's what I want for the Long haul. I'm 35 with 25 years until retirement so I have time.Mike Scott wrote: ↑Sun Dec 05, 2021 9:40 amYou should lead with this statement or people will not get past the EJ mention.
What's the lowest cost option with the best tax efficiency and the ability to do a future transfer out?
Re: Unique EJ situation
That's what I'm currently doing. I buy all vanguard with our money. EJ is seperate and funded by gift funds.UpperNwGuy wrote: ↑Sun Dec 05, 2021 9:39 am Instead of buying Vanguard funds within Edward Jones, why not open up a separate Vanguard account and buy the Vanguard funds there? You could make all new contributions (that are not gifted money) to Vanguard instead of to Edward Jones. You could deal with the problem of your American Funds later.
Re: Unique EJ situation
scsu74 wrote: ↑Sun Dec 05, 2021 9:32 am Hoping for some advice on a unique circumstance. This is in a taxable account and all investments are gifted. If we move money out of EJ the gifts will stop.
I emphasis this so others recognize that moving from EJ is not a personally positive move for you.
A portion of our investments (25% ~ 70k) are unfortunately within Edwards Jones. As many of you know that means a 5.75% front load on their American Funds. I've been debating if it's better to just give in and continue with American funds or start buying vanguard within EJ since in the long run I'm going to pull everything out of EJ over to vanguard.
The purchase fees even out at about 1k. They charge 5% for external ETFs at 1k invested. The really bad part is they also charge 2% on dividends.
I am not sure this is a big deal for now. It seems that if you have $20k in VTI, this would be just $8 a year, roughly. Remember that it is 2% on 2% not 2% on the total account value.
The American funds (ANWPX) have done well for us, so the debate is whether to eat the load fee and higher ER until I can pull out since there's no fee on the dividends with the AF.
If I understand correctly, purchasing an ETF with be a 5% fee vs a 5.75% load. You will have a small fee for dividend reinvestment for the ETF but the reduced ER for an ETF like VTI, will more than make up for it. Additionally, you will not have the dividend reinvestment fee once you leave Vanguard. And you will not be back here after leaving EJ trying to decide if it is worth the capital gains tax to sell the American Fund investment yet to be purchased. Badly worded, but the point is to not put more money into something that you do not want to keep long term.
Appreciate any/all help!
Last edited by Katietsu on Sun Dec 05, 2021 10:02 am, edited 2 times in total.
Re: Unique EJ situation
Dividends on vanguard are charged 2% fee. The 5.75% is only on original purchase of funds.arcticpineapplecorp. wrote: ↑Sun Dec 05, 2021 9:38 ami wouldn't direct any NEW money to EJ. I wouldn't buy Vanguard funds through EJ if it's going to cost to do so.scsu74 wrote: ↑Sun Dec 05, 2021 9:32 am Hoping for some advice on a unique circumstance. A portion of our investments (25% ~ 70k) are unfortunately within Edwards Jones. As many of you know that means a 5.75% front load on their American Funds. I've been debating if it's better to just give in and continue with American funds or start buying vanguard within EJ since in the long run I'm going to pull everything out of EJ over to vanguard.
The purchase fees even out at about 1k. They charge 5% for external ETFs at 1k invested. The really bad part is they also charge 2% on dividends.
The American funds (ANWPX) have done well for us, so the debate is whether to eat the load fee and higher ER until I can pull out since there's no fee on the dividends with the AF.
This is in a taxable account and all investments are gifted. If we move money out of EJ the gifts will stop.
Appreciate any/all help!
Open a brokerage acct with Vanguard or Schwab or Fidelity if you want to buy Vanguard funds, but buy the ETFs if going with the latter two to avoid the fees to buy Vanguard investments.
Once you do that, you might feel more inclined to move your monies from EJ to whatever brokerage you opened.
However, realize that if you sell a fund at EJ you could be looking at cap gains, so you have to understand the tax implication of switching funds. If you're able to move the funds in kind to another brokerage there shouldn't be a taxable event, but EJ will likely charge you a fee to close the acct with them.
if you reinvest dividends does that cause a 5.75% load to be incurred? If so, I would direct dividends to cash instead. You should generally do that anyway in a taxable acct in the event you have a tax loss harvesting opportunity.
can you tell us more about the "gifting" part? It doesn't matter that the EJ money was gifted to you (in the past), but what do you mean by the gifts will stop if you close the EJ acct?? Can't gifts be made to another acct? What's the deal with that?
I can't move the funds or withdraw or the gifts will stop. They're ongoing gifts in the form of asset transfers from their EJ account to ours with the condition the money stays within EJ.
Re: Unique EJ situation
Why will the gifts stop and must be at EJ?
Re: Unique EJ situation
Even if you earned more than the EJ fees, this is a big drag on the performance of your portfolio. Furthermore, why would you stay with Edward Jones when there are many other brokers who do not charge such high fees? There is nothing special about the American funds.scsu74 wrote: ↑Sun Dec 05, 2021 9:32 am Hoping for some advice on a unique circumstance. This is in a taxable account and all investments are gifted. If we move money out of EJ the gifts will stop.
A portion of our investments (25% ~ 70k) are unfortunately within Edwards Jones. As many of you know that means a 5.75% front load on their American Funds. I've been debating if it's better to just give in and continue with American funds or start buying vanguard within EJ since in the long run I'm going to pull everything out of EJ over to vanguard.
The purchase fees even out at about 1k. They charge 5% for external ETFs at 1k invested. The really bad part is they also charge 2% on dividends.
The American funds (ANWPX) have done well for us, so the debate is whether to eat the load fee and higher ER until I can pull out since there's no fee on the dividends with the AF.
Appreciate any/all help!
"I started with nothing and I still have most of it left."
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Re: Unique EJ situation
Say thank you to whomever is giving you money !
Unless you can easily show the gifter how everyone will save 6% by getting out from under EJ; I’d leave the feedback to thank you.
I’d get whatever I could (without offending them) out of EJ’s hands
Unless you can easily show the gifter how everyone will save 6% by getting out from under EJ; I’d leave the feedback to thank you.
I’d get whatever I could (without offending them) out of EJ’s hands
Re: Unique EJ situation
How big of an account is this in relation to your overall portfolio?scsu74 wrote: ↑Sun Dec 05, 2021 9:48 amDividends on vanguard are charged 2% fee. The 5.75% is only on original purchase of funds.arcticpineapplecorp. wrote: ↑Sun Dec 05, 2021 9:38 ami wouldn't direct any NEW money to EJ. I wouldn't buy Vanguard funds through EJ if it's going to cost to do so.scsu74 wrote: ↑Sun Dec 05, 2021 9:32 am Hoping for some advice on a unique circumstance. A portion of our investments (25% ~ 70k) are unfortunately within Edwards Jones. As many of you know that means a 5.75% front load on their American Funds. I've been debating if it's better to just give in and continue with American funds or start buying vanguard within EJ since in the long run I'm going to pull everything out of EJ over to vanguard.
The purchase fees even out at about 1k. They charge 5% for external ETFs at 1k invested. The really bad part is they also charge 2% on dividends.
The American funds (ANWPX) have done well for us, so the debate is whether to eat the load fee and higher ER until I can pull out since there's no fee on the dividends with the AF.
This is in a taxable account and all investments are gifted. If we move money out of EJ the gifts will stop.
Appreciate any/all help!
Open a brokerage acct with Vanguard or Schwab or Fidelity if you want to buy Vanguard funds, but buy the ETFs if going with the latter two to avoid the fees to buy Vanguard investments.
Once you do that, you might feel more inclined to move your monies from EJ to whatever brokerage you opened.
However, realize that if you sell a fund at EJ you could be looking at cap gains, so you have to understand the tax implication of switching funds. If you're able to move the funds in kind to another brokerage there shouldn't be a taxable event, but EJ will likely charge you a fee to close the acct with them.
if you reinvest dividends does that cause a 5.75% load to be incurred? If so, I would direct dividends to cash instead. You should generally do that anyway in a taxable acct in the event you have a tax loss harvesting opportunity.
can you tell us more about the "gifting" part? It doesn't matter that the EJ money was gifted to you (in the past), but what do you mean by the gifts will stop if you close the EJ acct?? Can't gifts be made to another acct? What's the deal with that?
I can't move the funds or withdraw or the gifts will stop. They're ongoing gifts in the form of asset transfers from their EJ account to ours with the condition the money stays within EJ.
How long will these gifts continue? 5 years? 40 years?
Under what conditions would you be permitted to remove money?
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Re: Unique EJ situation
On the surface, the “strings” on the gifts seem financially controlling. If you can’t persuade the gift giver to allow you to transfer the funds out of EJ to lower your investment costs, if your financial situation is strong enough consider declining future gifts to get out of the situation.
Edit - are there any circumstances under which the gift giver will allow you to use the gifted funds - for example, paying down a mortgage? You can then redirect former mortgage payments to fund a non-EJ account.
Last edited by HomeStretch on Sun Dec 05, 2021 10:08 am, edited 2 times in total.
Re: Unique EJ situation
Very good points, thank you, that makes a lot of sense. I didn't realize the dividend fee was that minimal. Was thinking it was against total account value.Katietsu wrote: ↑Sun Dec 05, 2021 9:47 amscsu74 wrote: ↑Sun Dec 05, 2021 9:32 am Hoping for some advice on a unique circumstance. This is in a taxable account and all investments are gifted. If we move money out of EJ the gifts will stop.
I emphasis this so others recognize that moving from EJ is not a personally positive move for you.
A portion of our investments (25% ~ 70k) are unfortunately within Edwards Jones. As many of you know that means a 5.75% front load on their American Funds. I've been debating if it's better to just give in and continue with American funds or start buying vanguard within EJ since in the long run I'm going to pull everything out of EJ over to vanguard.
The purchase fees even out at about 1k. They charge 5% for external ETFs at 1k invested. The really bad part is they also charge 2% on dividends.
I am not sure this is a big deal for now. It seems that if you have $20k in VTI, this would be just $8 a year, roughly. Remember that it is 2% on 2% not 2% on the total account value.
The American funds (ANWPX) have done well for us, so the debate is whether to eat the load fee and higher ER until I can pull out since there's no fee on the dividends with the AF.
If I understand correctly, purchasing an ETF with be a 5% fee vs a 5.75% load. You will have a small fee for dividend reinvestment for the ETF but the reduced ER for an ETF like VTI, will more than make up for it. Additionally, you will not have the dividend reinvestment fee once you leave Vanguard. And you will not be back here after leaving EJ trying to decide if it is worth the capital gains tax to sell the American Fund investment yet to be purchased. Badly worded, but the point is to not put more money into something that you do not want to keep long term.
Appreciate any/all help!
Re: Unique EJ situation
25% of total portfolio or about 70k. Until they decide to stop them I imagine. I'm guessing 10 years or less. We've withdrawn for expenses in the past. She just doesn't want us withdrawing to fund outside account.exodusNH wrote: ↑Sun Dec 05, 2021 9:56 amHow big of an account is this in relation to your overall portfolio?scsu74 wrote: ↑Sun Dec 05, 2021 9:48 amDividends on vanguard are charged 2% fee. The 5.75% is only on original purchase of funds.arcticpineapplecorp. wrote: ↑Sun Dec 05, 2021 9:38 ami wouldn't direct any NEW money to EJ. I wouldn't buy Vanguard funds through EJ if it's going to cost to do so.scsu74 wrote: ↑Sun Dec 05, 2021 9:32 am Hoping for some advice on a unique circumstance. A portion of our investments (25% ~ 70k) are unfortunately within Edwards Jones. As many of you know that means a 5.75% front load on their American Funds. I've been debating if it's better to just give in and continue with American funds or start buying vanguard within EJ since in the long run I'm going to pull everything out of EJ over to vanguard.
The purchase fees even out at about 1k. They charge 5% for external ETFs at 1k invested. The really bad part is they also charge 2% on dividends.
The American funds (ANWPX) have done well for us, so the debate is whether to eat the load fee and higher ER until I can pull out since there's no fee on the dividends with the AF.
This is in a taxable account and all investments are gifted. If we move money out of EJ the gifts will stop.
Appreciate any/all help!
Open a brokerage acct with Vanguard or Schwab or Fidelity if you want to buy Vanguard funds, but buy the ETFs if going with the latter two to avoid the fees to buy Vanguard investments.
Once you do that, you might feel more inclined to move your monies from EJ to whatever brokerage you opened.
However, realize that if you sell a fund at EJ you could be looking at cap gains, so you have to understand the tax implication of switching funds. If you're able to move the funds in kind to another brokerage there shouldn't be a taxable event, but EJ will likely charge you a fee to close the acct with them.
if you reinvest dividends does that cause a 5.75% load to be incurred? If so, I would direct dividends to cash instead. You should generally do that anyway in a taxable acct in the event you have a tax loss harvesting opportunity.
can you tell us more about the "gifting" part? It doesn't matter that the EJ money was gifted to you (in the past), but what do you mean by the gifts will stop if you close the EJ acct?? Can't gifts be made to another acct? What's the deal with that?
I can't move the funds or withdraw or the gifts will stop. They're ongoing gifts in the form of asset transfers from their EJ account to ours with the condition the money stays within EJ.
How long will these gifts continue? 5 years? 40 years?
Under what conditions would you be permitted to remove money?
Re: Unique EJ situation
Seems like that is your answer. American Funds are well-regarded but obviously it's not ideal to pay a load. And of course, EJ has advisor fees.
If it's free money upon the condition you stay at EJ, think about opening a Roth IRA with them. At least then when you are able to transfer (sometime in the future) and sell it won't be a taxable event. Additionally, American Funds spin out a lot of dividends and capital gains which aren't welcome if you're in a higher tax bracket.
Re: Unique EJ situation
I mean money invested in EJ is better than not having the money. At least in my opinion. Just trying to make the best of a less than ideal brokerage.HomeStretch wrote: ↑Sun Dec 05, 2021 9:56 amOn the surface, the “strings” on the gifts seem financially controlling. If you can’t persuade the gift giver to allow you to transfer the funds out of EJ to lower your investment costs, if your financial situation is strong enough consider declining future gifts to get out of the situation.
Edit - are there any circumstances under which the gift giver will allow you to use the gifted funds - for example, paying down a mortgage?
Re: Unique EJ situation
That's a really good idea, I didn't think about doing a Roth with them. I'll look into that, thank you.goingup wrote: ↑Sun Dec 05, 2021 10:07 amSeems like that is your answer. American Funds are well-regarded but obviously it's not ideal to pay a load. And of course, EJ has advisor fees.
If it's free money upon the condition you stay at EJ, think about opening a Roth IRA with them. At least then when you are able to transfer (sometime in the future) and sell it won't be a taxable event. Additionally, American Funds spin out a lot of dividends and capital gains which aren't welcome if you're in a higher tax bracket.
Re: Unique EJ situation
I would open an account at Vanguard, TDAmeritrade, Fidelity, or Schwab and contribute money to it. I would never contribute to the EJ account.
Based on this last statement, I would use the EJ account to pay more expenses as I invested more in my non-EJ account(s). I would keep the non-EJ account secret and/or hidden from my benefactor. I would not make my expenses paid by EJ so large that they are onerous, but they would be legitimate expenses. Would those expenses be $500 a year? $1000 a year? $2000 a year? That is for you to decide.
Also, I would not use more than one single fund at EJ. Never 2, 3, ... funds. With American funds there are reduced front-end loads when one exceeds certain dollar amounts in a fund. In that past, EJ has divided up an account into multiple funds so that no single fund reaches the break point of reduced front-end loads. Don't let that happen to you.
Last edited by livesoft on Sun Dec 05, 2021 10:28 am, edited 2 times in total.
- arcticpineapplecorp.
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Re: Unique EJ situation
How will the gift giver know you've moved the funds? Do they have access to your accounts? Are you required to show them your EJ statements quarterly??scsu74 wrote: ↑Sun Dec 05, 2021 9:48 am Dividends on vanguard are charged 2% fee. The 5.75% is only on original purchase of funds.
I can't move the funds or withdraw or the gifts will stop. They're ongoing gifts in the form of asset transfers from their EJ account to ours with the condition the money stays within EJ.
Are you absolutely sure this is in writing that you are required to keep funds at EJ or is it just something the person said?
How does the person who's giving the money (if alive) feel about losing $4025 on the $70,000 you said is/will be gifted to you? Wouldn't the person want to know that the entire $70,000 made it to you rather than $65,975?
How would the person feel upon knowing that if s/he gave you $70,000 to you to invest where you could get no load vs. the 5.75% load you're paying now if grew at 8% per year for 40 years (choose your timeframe) would amount to:
$1,433,275.31 (after paying 5.75% load)
=FV(.08,40,0,-65975) in excel
vs.
$1,520,716.50 (if paying no load)
=FV(.08,40,0,-70000) in excel
That $4025 load on the $70,000 invested actually would have cost $87,441.19.
That's the difference between paying a load and NOT paying a load. Nothing else. Pure and simple.
Shouldn't the giver understand that?
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Re: Unique EJ situation
I just have to go on record saying these fees are remarkable. Nice job to any business that can dupe someone into paying that.
Re: Unique EJ situation
Requiring the funds to stay at EJ does not seem overly controlling to me. I know EJ is not well liked on this board but they are a legitimate financial services company.HomeStretch wrote: ↑Sun Dec 05, 2021 9:56 amOn the surface, the “strings” on the gifts seem financially controlling. If you can’t persuade the gift giver to allow you to transfer the funds out of EJ to lower your investment costs, if your financial situation is strong enough consider declining future gifts to get out of the situation.
Edit - are there any circumstances under which the gift giver will allow you to use the gifted funds - for example, paying down a mortgage? You can then redirect former mortgage payments to fund a non-EJ account.
Is the transfer occurring as a transfer of money or as an in kind transfer of shares? If it is the latter, are you sure you are paying a sales fee? And, also, if it is a transfer of shares not cash, you could have a capital gain to sell the American fund and buy the ETF. This is something that you would need to investigate because you might also be able to sell with few capital gains. With active funds, sometimes there is no or little capital gains at the time of sale even though the fund has done well. This happens because active funds may have lots of capital gains distributions along the way. Just additional factors that would need to be considered.
Re: Unique EJ situation
Her and the advisor are "friends." I believe what he's doing is criminal, but it's not really my place to say. I was going to transfer the entire account in the past and the advisor told her, that's when she said gifts will stop. So it's not in writing, but it's a conversation that's been had.arcticpineapplecorp. wrote: ↑Sun Dec 05, 2021 10:18 amHow will the gift giver know you've moved the funds? Do they have access to your accounts? Are you required to show them your EJ statements quarterly??scsu74 wrote: ↑Sun Dec 05, 2021 9:48 am Dividends on vanguard are charged 2% fee. The 5.75% is only on original purchase of funds.
I can't move the funds or withdraw or the gifts will stop. They're ongoing gifts in the form of asset transfers from their EJ account to ours with the condition the money stays within EJ.
Are you absolutely sure this is in writing that you are required to keep funds at EJ or is it just something the person said?
How does the person who's giving the money (if alive) feel about losing $4025 on the $70,000 you said is/will be gifted to you? Wouldn't the person want to know that the entire $70,000 made it to you rather than $65,975?
How would the person feel upon knowing that if s/he gave you $70,000 to you to invest where you could get no load vs. the 5.75% load you're paying now if grew at 8% per year for 40 years (choose your timeframe) would amount to:
$1,433,275.31 (after paying 5.75% load)
=FV(.08,40,0,-65975) in excel
vs.
$1,520,716.50 (if paying no load)
=FV(.08,40,0,-70000) in excel
That $4025 load on the $70,000 invested actually would have cost $87,441.19.
That's the difference between paying a load and NOT paying a load. Nothing else. Pure and simple.
Shouldn't the giver understand that?
Re: Unique EJ situation
If the fees are bothering you just stick with the American Funds.
Big picture you are better off not stressing too much about EJ since it is a condition of receiving the gifted funds. I imagine that I may end up doing something with my estate / trust for my child that she may think is too controlling, when I am 100% just trying to protect her assets and make her life easier than mine.
Big picture you are better off not stressing too much about EJ since it is a condition of receiving the gifted funds. I imagine that I may end up doing something with my estate / trust for my child that she may think is too controlling, when I am 100% just trying to protect her assets and make her life easier than mine.
Last edited by StevieG72 on Sun Dec 05, 2021 10:28 am, edited 1 time in total.
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- Doom&Gloom
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Re: Unique EJ situation
It depends upon how the amount of the gifts and their expected frequency and length of occurrence compare to the amount of assets you currently have in EJ.
I would be happy (kinda sorta) to leave my assets in EJ for quite a while under those stipulations if I expected large future gifts that could go no other place. That's the math & finances part of the situation. I was also raised to be thankful for and appreciative of gifts and not to insult the giver--that's another part entirely. I would feel quite sorry for the donor--but also very appreciative. I am guessing the donor has a personal relationship with your EJ guy and wants to help them out.
ETA: Just saw your most recent response. "Criminal"? I hardly think so unless there is something else going on.
I would be happy (kinda sorta) to leave my assets in EJ for quite a while under those stipulations if I expected large future gifts that could go no other place. That's the math & finances part of the situation. I was also raised to be thankful for and appreciative of gifts and not to insult the giver--that's another part entirely. I would feel quite sorry for the donor--but also very appreciative. I am guessing the donor has a personal relationship with your EJ guy and wants to help them out.
ETA: Just saw your most recent response. "Criminal"? I hardly think so unless there is something else going on.
Last edited by Doom&Gloom on Sun Dec 05, 2021 10:31 am, edited 1 time in total.
Re: Unique EJ situation
It gets really bad when you realize she paid that on initial investment, we're paying it on the gift investment and 4 other family members she's gifting to are also each paying another 5%. 30% total he's making
Re: Unique EJ situation
It shows up as cash in our and children's accountsKatietsu wrote: ↑Sun Dec 05, 2021 10:26 amRequiring the funds to stay at EJ does not seem overly controlling to me. I know EJ is not well liked on this board but they are a legitimate financial services company.HomeStretch wrote: ↑Sun Dec 05, 2021 9:56 amOn the surface, the “strings” on the gifts seem financially controlling. If you can’t persuade the gift giver to allow you to transfer the funds out of EJ to lower your investment costs, if your financial situation is strong enough consider declining future gifts to get out of the situation.
Edit - are there any circumstances under which the gift giver will allow you to use the gifted funds - for example, paying down a mortgage? You can then redirect former mortgage payments to fund a non-EJ account.
Is the transfer occurring as a transfer of money or as an in kind transfer of shares? If it is the latter, are you sure you are paying a sales fee? And, also, if it is a transfer of shares not cash, you could have a capital gain to sell the American fund and buy the ETF. This is something that you would need to investigate because you might also be able to sell with few capital gains. With active funds, sometimes there is no or little capital gains at the time of sale even though the fund has done well. This happens because active funds may have lots of capital gains distributions along the way. Just additional factors that would need to be considered.
Re: Unique EJ situation
WOW. Family stuff is hard, especially where $ is concerned so I feel for you. Best of luck sorting this out and I hope it ends favorably for you and your family.scsu74 wrote: ↑Sun Dec 05, 2021 10:29 amIt gets really bad when you realize she paid that on initial investment, we're paying it on the gift investment and 4 other family members she's gifting to are also each paying another 5%. 30% total he's making
Re: Unique EJ situation
Based on my experience, I would guess the giver does not want to know or care to understand that. Last time I tried to have a tiny bit of a conversation with someone using American Funds through an advisor, the person got upset and told me that the advisor had a right to make a salary for their service.arcticpineapplecorp. wrote: ↑Sun Dec 05, 2021 10:18 amHow will the gift giver know you've moved the funds? Do they have access to your accounts? Are you required to show them your EJ statements quarterly??scsu74 wrote: ↑Sun Dec 05, 2021 9:48 am Dividends on vanguard are charged 2% fee. The 5.75% is only on original purchase of funds.
I can't move the funds or withdraw or the gifts will stop. They're ongoing gifts in the form of asset transfers from their EJ account to ours with the condition the money stays within EJ.
Are you absolutely sure this is in writing that you are required to keep funds at EJ or is it just something the person said?
How does the person who's giving the money (if alive) feel about losing $4025 on the $70,000 you said is/will be gifted to you? Wouldn't the person want to know that the entire $70,000 made it to you rather than $65,975?
How would the person feel upon knowing that if s/he gave you $70,000 to you to invest where you could get no load vs. the 5.75% load you're paying now if grew at 8% per year for 40 years (choose your timeframe) would amount to:
$1,433,275.31 (after paying 5.75% load)
=FV(.08,40,0,-65975) in excel
vs.
$1,520,716.50 (if paying no load)
=FV(.08,40,0,-70000) in excel
That $4025 load on the $70,000 invested actually would have cost $87,441.19.
That's the difference between paying a load and NOT paying a load. Nothing else. Pure and simple.
Shouldn't the giver understand that?
The person gifting the money wants to use EJ and is not open to changing that based on comments made by the OP. Seems like that is a choice that they should be able to make.
I realize a 5.75% load is not desirable. But it is still just a 5.75% load not a 30% load. Having the cash and purchases divided amongst multiple family members does not increase the % of the load. And the financial advisor is not profiting the 5.75%.
Just decide what is best for you within the confines of the account and don’t stress about the rest. This is not some crazy rip off scheme that you are describing.
Re: Unique EJ situation
Maybe it will make you feel better to realize that the % does not change with more family members. Still just 5-5.75%.
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Re: Unique EJ situation
It probably would not help you keep the gifts coming, but a well placed note to EJ that one of their salespeople is disclosing one client's information to another might result in well deserved discipline against that EJ salesperson.scsu74 wrote: ↑Sun Dec 05, 2021 10:27 am Her and the advisor are "friends." I believe what he's doing is criminal, but it's not really my place to say. I was going to transfer the entire account in the past and the advisor told her, that's when she said gifts will stop. So it's not in writing, but it's a conversation that's been had.
Re: Unique EJ situation
Why wouldn’t you just take as much money as you can out of the EJ account while still leaving it open? Is the stipulation that you can’t ever withdraw money from the account either?
Re: Unique EJ situation
How are the other family members avoiding the 5.75% fee when they purchase with the cash in their account? I understand it's not a lump 30% load, but it's still 5.75% x 6 accounts every time they make a purchase.Katietsu wrote: ↑Sun Dec 05, 2021 10:45 amBased on my experience, I would guess the giver does not want to know or care to understand that. Last time I tried to have a tiny bit of a conversation with someone using American Funds through an advisor, the person got upset and told me that the advisor had a right to make a salary for their service.arcticpineapplecorp. wrote: ↑Sun Dec 05, 2021 10:18 amHow will the gift giver know you've moved the funds? Do they have access to your accounts? Are you required to show them your EJ statements quarterly??scsu74 wrote: ↑Sun Dec 05, 2021 9:48 am Dividends on vanguard are charged 2% fee. The 5.75% is only on original purchase of funds.
I can't move the funds or withdraw or the gifts will stop. They're ongoing gifts in the form of asset transfers from their EJ account to ours with the condition the money stays within EJ.
Are you absolutely sure this is in writing that you are required to keep funds at EJ or is it just something the person said?
How does the person who's giving the money (if alive) feel about losing $4025 on the $70,000 you said is/will be gifted to you? Wouldn't the person want to know that the entire $70,000 made it to you rather than $65,975?
How would the person feel upon knowing that if s/he gave you $70,000 to you to invest where you could get no load vs. the 5.75% load you're paying now if grew at 8% per year for 40 years (choose your timeframe) would amount to:
$1,433,275.31 (after paying 5.75% load)
=FV(.08,40,0,-65975) in excel
vs.
$1,520,716.50 (if paying no load)
=FV(.08,40,0,-70000) in excel
That $4025 load on the $70,000 invested actually would have cost $87,441.19.
That's the difference between paying a load and NOT paying a load. Nothing else. Pure and simple.
Shouldn't the giver understand that?
The person gifting the money wants to use EJ and is not open to changing that based on comments made by the OP. Seems like that is a choice that they should be able to make.
I realize a 5.75% load is not desirable. But it is still just a 5.75% load not a 30% load. Having the cash and purchases divided amongst multiple family members does not increase the % of the load. And the financial advisor is not profiting the 5.75%.
Just decide what is best for you within the confines of the account and don’t stress about the rest. This is not some crazy rip off scheme that you are describing.
Last edited by scsu74 on Sun Dec 05, 2021 11:11 am, edited 1 time in total.
Re: Unique EJ situation
Thank you!Picasso wrote: ↑Sun Dec 05, 2021 10:32 amWOW. Family stuff is hard, especially where $ is concerned so I feel for you. Best of luck sorting this out and I hope it ends favorably for you and your family.scsu74 wrote: ↑Sun Dec 05, 2021 10:29 amIt gets really bad when you realize she paid that on initial investment, we're paying it on the gift investment and 4 other family members she's gifting to are also each paying another 5%. 30% total he's making
Re: Unique EJ situation
I'm not an EJ fan, but if I were in this situation my response would be gratitude. Not understanding the struggle with getting free money.
Do as the gift-giver requires. Play the long game. In the future, when you are able, transfer to a low-cost broker. I think you will see that you American Funds perform just fine.
Do as the gift-giver requires. Play the long game. In the future, when you are able, transfer to a low-cost broker. I think you will see that you American Funds perform just fine.
Re: Unique EJ situation
We're very grateful, the intent of the post was to try and minimize fees if one option was clear and away better or learn about things I hadn't thought of, like going the Roth route. We're very fortunate, just trying to make sure we're making the best choices available.goingup wrote: ↑Sun Dec 05, 2021 11:16 am I'm not an EJ fan, but if I were in this situation my response would be gratitude. Not understanding the struggle with getting free money.
Do as the gift-giver requires. Play the long game. In the future, when you are able, transfer to a low-cost broker. I think you will see that you American Funds perform just fine.
Re: Unique EJ situation
Earlier OP mentioned the gifts were transferred in as cash. This makes me think the EJ advisor is coercing the gifted to liquidate her shares, gift the money, and have her require the recipient buys back in. If true, and to me (and I think his licensing ethics board), this is grossly unethical.
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Re: Unique EJ situation
Break points apply at the fund family level, not the fund level. Having multiple funds wouldn't be an issue.livesoft wrote: ↑Sun Dec 05, 2021 10:18 am
Also, I would not use more than one single fund at EJ. Never 2, 3, ... funds. With American funds there are reduced front-end loads when one exceeds certain dollar amounts in a fund. In that past, EJ has divided up an account into multiple funds so that no single fund reaches the break point of reduced front-end loads. Don't let that happen to you.
May the Force be with you.
Re: Unique EJ situation
What you are describing is Rights of Accumulation and as more is acquired within a fund family, you get break points on the load, my understanding is that this is by fund family and not by the individual fund. My understanding is that the break points are set by the mutual fund company and not by the broker.livesoft wrote: ↑Sun Dec 05, 2021 10:18 am
Also, I would not use more than one single fund at EJ. Never 2, 3, ... funds. With American funds there are reduced front-end loads when one exceeds certain dollar amounts in a fund. In that past, EJ has divided up an account into multiple funds so that no single fund reaches the break point of reduced front-end loads. Don't let that happen to you.
From the American Funds website:
When you purchase Class A, 529-A and ABLE-A shares, your sales charge is based on the total value of all the accounts that you, your spouse or equivalent (if recognized by law) and children under 21 have with American Funds.
Depending upon the type of fund purchased, there are sales charges of 5.75%, 3.75%, and 2.50%. With the funds with 5.75% sales charges, the breakpoints start at $25,000 and at that point the sales charge goes down to 5.00%. The funds that have a sales charge of 3.75% or 2.50% have their first break point at $100,000. When your investments with American Funds reaches $1,000,000 then there are no more sales loads.
https://www.capitalgroup.com/individual ... arges.html
What Edward Jones might be doing is wanting to split the client's investments between mutual fund companies but simply having more funds within the same mutual fund family does not affect the break points.
A fool and his money are good for business.
Re: Unique EJ situation
This would be my approach as well, I would graciously accept the gifts. Your American Funds will do just fine over time, unfortunately in a taxable account you will have capital gains and dividend distributions upon which you will have to pay tax. Though you have the annoyance of paying the extra tax, the taxed distributions also raise your cost basis over time.scsu74 wrote: ↑Sun Dec 05, 2021 11:20 amWe're very grateful, the intent of the post was to try and minimize fees if one option was clear and away better or learn about things I hadn't thought of, like going the Roth route. We're very fortunate, just trying to make sure we're making the best choices available.goingup wrote: ↑Sun Dec 05, 2021 11:16 am I'm not an EJ fan, but if I were in this situation my response would be gratitude. Not understanding the struggle with getting free money.
Do as the gift-giver requires. Play the long game. In the future, when you are able, transfer to a low-cost broker. I think you will see that you American Funds perform just fine.
A fool and his money are good for business.
Re: Unique EJ situation
TJat wrote: ↑Sun Dec 05, 2021 11:21 amEarlier OP mentioned the gifts were transferred in as cash. This makes me think the EJ advisor is coercing the gifted to liquidate her shares, gift the money, and have her require the recipient buys back in. If true, and to me (and I think his licensing ethics board), this is grossly unethical.
Yep, that's correct. Gifter is liquidating. Gifting cash to 7 accounts, then this accounts are each paying the load every time we purchase
Re: Unique EJ situation
If you cannot invest the money in Roth I would buy VTI instead of the American Funds. VTI is a better long term investment and to get out of AF you will be subject to capital gains tax.
Regarding the unusual strings attached to these gifts, with some of the other recipients having the donor knowing the money is being managed by EJ and being able to keep an eye on it may be wise. EJ is dreadful but many individuals could do far worse.
Regarding the unusual strings attached to these gifts, with some of the other recipients having the donor knowing the money is being managed by EJ and being able to keep an eye on it may be wise. EJ is dreadful but many individuals could do far worse.
Re: Unique EJ situation
Are you paying AUM management fees to EJ advisor or just commissions ? Is the account discretionary ?
Under the gifting circumstances, I would insist non-discretionary, meaning YOU decide the trades, not the advisor, so you can treat this as part of your overall AA, and buy funds you wont later mind keeping when eventually transferring out. I see nothing wrong with buying ETFs there (one time high commission) and later moving them anywhere.
Finally I would keep some in short term bond funds for ease of withdrawing without large cap gains, to pay any expenses from EJ vs holding similar emergency fund type of holding elsewhere. Can keep more equity outside EJ where you can avoid needing to sell and take cap gains in an account where you have longer term plans.
Under the gifting circumstances, I would insist non-discretionary, meaning YOU decide the trades, not the advisor, so you can treat this as part of your overall AA, and buy funds you wont later mind keeping when eventually transferring out. I see nothing wrong with buying ETFs there (one time high commission) and later moving them anywhere.
Finally I would keep some in short term bond funds for ease of withdrawing without large cap gains, to pay any expenses from EJ vs holding similar emergency fund type of holding elsewhere. Can keep more equity outside EJ where you can avoid needing to sell and take cap gains in an account where you have longer term plans.
Re: Unique EJ situation
Just the load fees. It's non-discretionary, the cash just sits until I call him and direct it. That's what I've been doing, I re-balance/balance inside my 457 so there aren't tax implications. My AA is across all our investments, EJ is just a part of the larger portfolio. I don't hold a lot of bonds (10%) since I'll also have two pensions in retirement.beyou wrote: ↑Sun Dec 05, 2021 11:38 am Are you paying AUM management fees to EJ advisor or just commissions ? Is the account discretionary ?
Under the gifting circumstances, I would insist non-discretionary, meaning YOU decide the trades, not the advisor, so you can treat this as part of your overall AA, and buy funds you wont later mind keeping when eventually transferring out. I see nothing wrong with buying ETFs there (one time high commission) and later moving them anywhere.
Finally I would keep some in short term bond funds for ease of withdrawing without large cap gains, to pay any expenses from EJ vs holding similar emergency fund type of holding elsewhere. Can keep more equity outside EJ where you can avoid needing to sell and take cap gains in an account where you have longer term plans.
Starting Jan 1, I'll also be in the 0% long term bracket so was thinking about cashing out the American funds when I'll pay the lowest tax on them. Unfortunately, we'll still have to pay state tax.
Re: Unique EJ situation
Yep! Same advisor. The fun never endsMakefile wrote: ↑Sun Dec 05, 2021 11:56 am I knew it sounded familiar:
viewtopic.php?f=2&t=298937&p=4926577
Re: Unique EJ situation
At some point this is no different than the grandmother choosing to gift $575 to the advisor and $9425 to your family, right?scsu74 wrote: ↑Sun Dec 05, 2021 11:43 am Just the load fees. It's non-discretionary, the cash just sits until I call him and direct it. That's what I've been doing, I re-balance/balance inside my 457 so there aren't tax implications. My AA is across all our investments, EJ is just a part of the larger portfolio. I don't hold a lot of bonds (10%) since I'll also have two pensions in retirement.
Starting Jan 1, I'll also be in the 0% long term bracket so was thinking about cashing out the American funds when I'll pay the lowest tax on them. Unfortunately, we'll still have to pay state tax.
You mentioned that you use VTI and VXUS for this account but that purchases get docked 5% and dividend reinvestments docked 2%.
I wonder if you can find any mutual funds at EJ with lower fees than that? The 2% reinvestment fee presumably doesn't apply to mutual funds, right?
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Re: Unique EJ situation
i think the issue is a little more complicated than you choose to frame it.Doom&Gloom wrote: ↑Sun Dec 05, 2021 10:28 am I was also raised to be thankful for and appreciative of gifts and not to insult the giver--that's another part entirely. I would feel quite sorry for the donor--but also very appreciative.
1. you can be appreciative of the gift and giver.
2. at the same time, you can give constructive feedback without being insulting.
3. most importantly, when a gift is given it is out of the giver's hands. how the recipient chooses to use that money is up to them. You may not agree with how they use the money. you may choose not to give again. but to control the money after it's been given is unacceptable behavior on the part of the giver and the giver needs to understand she's given up the right to how that money is used once it's out of her hands.
it would be fine for her to say:
"If you move the money I won't give you more."
But she cannot say:
"You can not move this money."
It's not hers anymore and the OP can do with it what he wants.
4. And will the EJ "friend" tattletale on the OP and tell the giver that the OP moved the money?? How else would the giver find out if the giver isn't auditing the OP's EJ statements quarterly?? Is that a violation in any way? Who is the EJ "friend" really obligated to especially if there is nothing in writing that the OP must keep funds with EJ???
Also, if she concludes the gifts at the end of 10 years, then what? Is the OP free to move the money then? If so, does the giver only care about the EJ "friend" making money for 10 years, but not care about him/her after that? Why?
Another thought: if the EJ "friend" wants the commission he's got it the moment the gift is made. He makes nothing after that unless he's charging an AUM on top of the commission. Is he? If not, the OP should be free to move the money because the EJ "friend" got his payoff. If he gets AUM, then he's continuing to siphon off the profits.
If the giver wants to help out the EJ rep/friend, then the giver should just give money to the EJ Rep/friend and not do it in a round about way through commissions. Actually, giving a direct gift to the EJ rep/friend would be better because he now has to pay taxes on his earnings. If he received the money as a direct gift there wouldn't be a conesquence financially. This is structured in an unproductive way not only for the OP (loss of earnings) but also for the Ed Jones rep/friend (loss of money due to taxes owed on earnings/commission). Sort of a lose/lose if you ask me. If she's trying to help two people out, there was a better way of doing that (direct giving to both, no need for strings attached).Doom&Gloom wrote: ↑Sun Dec 05, 2021 10:28 am I am guessing the donor has a personal relationship with your EJ guy and wants to help them out.
I think that's constructive feedback and nothing I have written has been said in a way that insults the giver, unless the giver isn't interested in learning how her giving could be structured in a more productive way.
Last edited by arcticpineapplecorp. on Sun Dec 05, 2021 12:24 pm, edited 2 times in total.
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Re: Unique EJ situation
EJ is profiting from the gift giver if not the gift receivers. It does not seem that the gift receivers can do anything about this short of holding an intervention with the gift giver. I think the post that shows the gift giver is giving a certain portion to the gift receivers and a significant gift to EJ captures the situation. How one explains that to the gift giver can't be answered here. Most likely this is a very small portion of the assets that have already been gifted to EJ over the years.