Transferring IRA as Beneficiary While Avoiding Financial Adviser

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egionesco
Posts: 6
Joined: Wed Sep 13, 2017 7:21 pm

Transferring IRA as Beneficiary While Avoiding Financial Adviser

Post by egionesco » Wed Sep 13, 2017 7:36 pm

Hi all,

I've inherited three IRAs as a non-spousal beneficiary. Shortly after the decedent passed, his financial adviser called me to let me know.

I read up on this forum and decided to just let the financial adviser handle the transferring of the name while leaving the funds in the accounts they are currently in. My intention was to transfer them to Vanguard once they were named properly and all was settled.

However, the adviser sent me forms to sign, and the forms are Oppenheimer transfer request forms. These forms have left me confused to say the least. The adviser has pre-filled the forms to move the funds into different Oppenheimer funds. In the comments section, he has written that I feel these match up more with my investment desires than the previous funds-- I don't even know what the previous funds were except for one of the IRAs was a 3.5% annuity. I even told him over the phone that I wanted the funds left where they were.

On the IRA transfer sheets, there is a spot for "resigning trustee, custodian, or financial institution." On two of the three IRAs, Gleaner Life is listed. A third IRA lists AIG. The form then says to transfer to Oppenheimer and the financial adviser is listed as this guy's company. So, a few questions:

1) Where are the funds currently invested? Are the funds currently in Oppenheimer funds and how do I know this?

2) Can I go through the "resigning custodians" and fill out the transfer work myself since I am the beneficiary? According to the forms, I will get hit with a fair number of fees at Oppenheimer as expected, but the biggest problem is I take a 1% hit on the funds if I withdraw before two years. I do not want to leave these funds in Oppenheimer.

3) If I can't go through the custodians themselves, how do I handle this with the adviser? I know everyone says get the IRAs re-titled first, but should I just contact Vanguard and bring them into the situation?

Thank you for any help you can provide. I have a good sense of what I need to do and can handle the paperwork myself, I'm just not sure if I can do it without the financial adviser, which is my preference.

123
Posts: 2308
Joined: Fri Oct 12, 2012 3:55 pm

Re: Transferring IRA as Beneficiary While Avoiding Financial Adviser

Post by 123 » Wed Sep 13, 2017 8:31 pm

1.) It sounds like there are two accounts with Gleaner LIfe and one account with AIG. I would suspect that these IRA accounts are annuities, likely variable.

2.) You can contact Gleaner Life and AIG directly. The more identifying info you have the easier it is for them to assist you. All the information needed may be on the transfer forms the adviser sent for your signatures. Give it a try.

Be mindful of tax issues when transferring accounts. You do not want the funds issued to you directly.

It may be a good idea to contact the person handling the estate of the deceased to see if there are additional accounts that will involve you.
The closest helping hand is at the end of your own arm.

egionesco
Posts: 6
Joined: Wed Sep 13, 2017 7:21 pm

Re: Transferring IRA as Beneficiary While Avoiding Financial Adviser

Post by egionesco » Wed Sep 13, 2017 9:07 pm

Hey 123,

Thank you very much for your advice.

As far as I know, the financial adviser is handling the accounts of the deceased, he is the only one who contacted me, although I learned of the 3rd account from him ten days after the first two, not sure how all this stuff works. The financial adviser has been quick and very responsive, but he also included inaccurate information in his notes because, in my opinion, he sees me as mark and is trying to push me into Oppenheimer. Of course, if they are in annuities, I may not be able to leave them as is. But if I need to transfer them out, I'd rather just send them to Vanguard.

I'll try contacting the companies directly. The financial adviser has been all over me to send back the paperwork but as far as I can tell the only reason for expediency is because the paperwork includes forms for me to sign up for his services and Oppenheimer funds. That being said, as he is the only contact I have for this stuff, I don't want to burn the bridge.

Last question: As he is the broker for these accounts, does that give him any special relationship to them? Or perhaps I can call the companies themselves and tell them I am the beneficiary and I no longer work with this brokerage?

123
Posts: 2308
Joined: Fri Oct 12, 2012 3:55 pm

Re: Transferring IRA as Beneficiary While Avoiding Financial Adviser

Post by 123 » Wed Sep 13, 2017 9:26 pm

I think you should have no difficulty dealing with the companies directly. He was an adviser to the purchaser of the (likely) annuities and not to you. He really isn't motivated to provide any service to you unless it's something that generates a fee/commission to him. While insurance companies often prefer you to go through an agent for new policies they will usually deal with you directly in claims/beneficiary situations. Life insurance agents often jump into the middle of things when someone passes away to make it "easier" on the bereaved but are more motivated by the chance to make a new fee/commission on a new product sale. The old financial adviser likely can't do anything without your signature so if he contacts you again you can always just say that you're thinking things over. Period.
The closest helping hand is at the end of your own arm.

egionesco
Posts: 6
Joined: Wed Sep 13, 2017 7:21 pm

Re: Transferring IRA as Beneficiary While Avoiding Financial Adviser

Post by egionesco » Fri Sep 15, 2017 12:11 pm

Ugh.

So I just contacted the custodians of these accounts- found out I have another account (considerably smaller than the others) that the financial adviser did not tell me about.

These accounts are annuities that are part of an IRA, a 403(b), and a TSA- the customer service agent told me that I would be not able to title these as inherited IRAs because they are in state-specific tax-sheltered annuities for a state that I am not a resident of- and also because the custodian does not operate in my state. She told me I need to go through the financial adviser because he "might be able to do the transfer within other companies he works with."

I contacted Vanguard and they said they can only help me once the accounts are titled in my name. But according to the custodian, the accounts cannot be transferred in my name as an inherited IRA- I know they have the authority to not allow an Inherited IRA, so I think unfortunately I am stuck sticking with my financial adviser for the transfer of these accounts.

So, at this point, my question has changed: What can I do to minimize the fees I pay? I do not think I can get around his 1% fee- and frankly, he's actually earning this if through his relationships he can keep me in inherited IRAs with a company that could conceivably refuse this. But I do not want to pay Oppenheimer's outrageous fees. What specifically can I tell my financial adviser to do? Surely even if he will not work with Vanguard, etc., there are some places that I can put the funds with lower fees that I can later transfer to Vanguard?

Thanks for your help.

aristotelian
Posts: 2584
Joined: Wed Jan 11, 2017 8:05 pm

Re: Transferring IRA as Beneficiary While Avoiding Financial Adviser

Post by aristotelian » Fri Sep 15, 2017 1:02 pm

I had this happen recently, with the additional wrinkle that the beneficiaries were my minor children. I did as you are thinking and had the FA handle re-titling the accounts. In fact, I don't think I was given any option--they had to be retitled before anything else could be done.

Within a few months, with the help of Bogleheads, I then transferred and combined the accounts into a single Inherited IRA at Vanguard myself.

The second part I did myself through Vanguard. Vanguard actually handled the transfer. I let the FA know what was happening as a courtesy but didn't actually need him for anything.

The FA graciously reimbursed us the pro-rated portion of his fees. You should definitely ask about that if it is not offered.

I did have to call a couple of the companies directly in order to liquidate some of the investments since Vanguard cannot be a custodian for other companies' proprietary investments. I would guess this will be the case for your annuities.

I would be careful about getting into anything new unless you are certain there are no load fees or fees to get out of the annuities.

egionesco
Posts: 6
Joined: Wed Sep 13, 2017 7:21 pm

Re: Transferring IRA as Beneficiary While Avoiding Financial Adviser

Post by egionesco » Fri Sep 15, 2017 1:15 pm

Thank you for your help.

Unfortunately, for some of them, I am required to get out of the annuity, apparently. I don't think there will be a re-titling without transferring the money to a new account, which is why I'm trying to avoid Oppenheimer. One might wonder why I can transfer funds into Oppenheimer with the help of a financial adviser and why I can't just do this through Vanguard, but Vanguard will not help me until the name is changed and the name evidently will not be changed without the financial adviser's connections. To clarify, what I am saying is that they will not re-title the account if I contact them directly, but the financial adviser will be able to get the account re-titled in order to facilitate a transfer because he has a working relationship with the company.

I will ask specifically about load fees- I know they can be 5.75% at Oppenheimer but none are listed on the paperwork the CFA gave me.

It really sucks that I'm basically forced to use a guy who sees me as a mark and is treating me like a used car salesman.

I will reiterate to the CFA that I want to keep the accounts where they are now, but it is written on the forms and has been confirmed by my calls to one of the companies that this is not possible.

aristotelian
Posts: 2584
Joined: Wed Jan 11, 2017 8:05 pm

Re: Transferring IRA as Beneficiary While Avoiding Financial Adviser

Post by aristotelian » Fri Sep 15, 2017 2:06 pm

Just saw your above post on fees. My attitude is, don't worry too much about it. At least the guy that my relative had charged quarterly, and as I said above, the fees were returned on a pro-rated basis when I left him. So, for example, if yours is charging 1% annually, he should only charge .25% up front for the first quarter, and you may get the majority back.

Certainly you want to make the most of the money you have inherited, but you can also look at it like the deceased made the choice to go with this person, and this is just the necessary cost of changing to your strategy.

I am not sure why he is pushing a new custodian. You should be able to do the first step just by re-titling the accounts at the current custodians. While he is working for you, he still has to do your bidding. If the funds are not actually in IRA's, I think the easiest thing to do would be to liquidate them to cash. You can then have him set you up in index funds, or do it yourself after you transfer the funds to the new custodian.

egionesco
Posts: 6
Joined: Wed Sep 13, 2017 7:21 pm

Re: Transferring IRA as Beneficiary While Avoiding Financial Adviser

Post by egionesco » Fri Sep 15, 2017 2:19 pm

The reason they have to be moved is because they are held in a company that is local and will not let me own accounts with them. The current custodian has told me over the phone that I cannot re-title them, but that the financial adviser may have ways to make that happen. Essentially, they are forcing me to use him.

I've accepted that I have to bite the bullet and use him. The accounts have about 300k so 1% is a nice chunk for him for doing a bit of paperwork. Now my only concern is getting the money into a fund that doesn't gouge me as much as Oppenheimer. Can and will financial advisers put my money into target funds on Schwab or T. Rowe Price?

aristotelian
Posts: 2584
Joined: Wed Jan 11, 2017 8:05 pm

Re: Transferring IRA as Beneficiary While Avoiding Financial Adviser

Post by aristotelian » Fri Sep 15, 2017 2:32 pm

egionesco wrote:
Fri Sep 15, 2017 2:19 pm
The reason they have to be moved is because they are held in a company that is local and will not let me own accounts with them. The current custodian has told me over the phone that I cannot re-title them, but that the financial adviser may have ways to make that happen. Essentially, they are forcing me to use him.

I've accepted that I have to bite the bullet and use him. The accounts have about 300k so 1% is a nice chunk for him for doing a bit of paperwork. Now my only concern is getting the money into a fund that doesn't gouge me as much as Oppenheimer. Can and will financial advisers put my money into target funds on Schwab or T. Rowe Price?
He works for you and has to do what you ask. You could tell him to put you in index funds. You could also tell him (or tell the current custodian) to simply cut you a check.

egionesco
Posts: 6
Joined: Wed Sep 13, 2017 7:21 pm

Re: Transferring IRA as Beneficiary While Avoiding Financial Adviser

Post by egionesco » Fri Sep 15, 2017 2:37 pm

Ah, well, I definitely don't want a check because then I would have to pay the taxes. I want to keep them as inherited IRAs if possible.

aristotelian
Posts: 2584
Joined: Wed Jan 11, 2017 8:05 pm

Re: Transferring IRA as Beneficiary While Avoiding Financial Adviser

Post by aristotelian » Fri Sep 15, 2017 2:50 pm

egionesco wrote:
Fri Sep 15, 2017 2:37 pm
Ah, well, I definitely don't want a check because then I would have to pay the taxes. I want to keep them as inherited IRAs if possible.
Sorry, I thought you had said that some or all of the accounts could not be transferred as IRA's. The ones that are not IRA's you should be able to liquidate to cash. You are right to keep the IRA's as IRA's. In any case, I think you need to get back on the phone to your FA.

You are definitely right to hold off on signing anything that you don't understand or have reservations about.

What you are hearing from the other custodian seems fishy to me. If you have a death certificate and you are the beneficiary, the accounts belong to you now, period, but if the FA was the one who set them up for the deceased he should be able to deal with the custodian to get them transferred.

Katietsu
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Joined: Sun Sep 22, 2013 1:48 am

Re: Transferring IRA as Beneficiary While Avoiding Financial Adviser

Post by Katietsu » Fri Sep 15, 2017 3:01 pm

How about having the current financial advisor move everything into a retitled IRA invested in a money market account of the financial advisor's choosing? I do not think it is worth it to reinvest with the funds available to this FA when you plan on immediately moving to Vanguard.

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