A small rant about a fee I was hit with...

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Larry_M
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A small rant about a fee I was hit with...

Post by Larry_M » Wed Jul 29, 2009 7:25 am

Let me preface this by saying that in the end, it is my own fault for not reading the fine print.

With that said, here is my story:

So I have (should say: had) an account with Fidelity. After being converted to the Boglehead way of investing, I decided to move my money from Fidelity to Vanguard. After a few calls to Vanguard, my new account was set up, and I was armed with all of the info/paperwork required to get the money transferred over to Vanguard. I decided to go all in, and move all of the money from the Fidelity to the Vangaurd account.

Everything went smoothly, but today I noticed that I got dinged with a $50 fee for closing my account with Fidelity. Does anyone else think this fee is complete B.S. or is this a normal fee charged by all of the fund families for closing an account? Does Vanguard charge such a fee for closing an account?

I am probably over reacting a little bit, but I must admit that this fee really put my knickers in a twist. As I mentioned in the beginning of this post, it is more than likely my own fault for not reading the fine print - I would like to assume that somewhere in the small print, Fidelity listed this fee.

If I would have known about this fee, I would have left a dollar (or whatever the minimum allowed by Fidelity) to remain in the Fidelity account just to avoid the $50 fee.

At any rate, let this be a cautionary tale for other new investors - don't make this mistake. $50 compounded annually over 30 years at an interest rate of 8% is 500ish bucks before taxes and inflation - Ouch!

I will chalk it up to a learning experience - I always make it a point to learn from my (and others) mistakes, and grow wiser as a result. I suppose that if this is the biggest investing mistake I ever make in my investing career, I got off lucky! :) I will not let it bother me too much, since I am escaping a 0.78% annual fund fee (at Fidelity) and investing in an equivalent indexed fund at Vanguard with a 0.19% annual expense. So another way to look at this situation is that it was $50 well spent to go from Fidelity to Vanguard...

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ddb
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Post by ddb » Wed Jul 29, 2009 7:40 am

I assume you were transferring from a Fidelity brokerage account? If so, an "exit" fee on a full outgoing transfer is pretty much the industry standard.

I wouldn't lose much sleep over it. As you say, the fee was almost certainly disclosed at some point in some fine print that you opted not to read.

Best of luck with your new Vanguard account!

- DDB
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Post by Larry_M » Wed Jul 29, 2009 7:50 am

ddb wrote:I assume you were transferring from a Fidelity brokerage account? If so, an "exit" fee on a full outgoing transfer is pretty much the industry standard.

I wouldn't lose much sleep over it. As you say, the fee was almost certainly disclosed at some point in some fine print that you opted not to read.

Best of luck with your new Vanguard account!

- DDB
Yes, it was a brokerage account...

I honestly am over it at this point, I just needed to vent a little bit - it was my own fault for not reading the fine prin, so bad on met. I just wanted to warn other new investors of this possible pitfall/fee.

I just ran some numbers, and here are the annual fees (Fidelity vs Vanguard) for my current balance of $5500:

Fidelity fees = $42.90 / year
Vanguard fees = $10.45 / year

Approximate annual savings for moving from Fidelity to Vanguard = $32.45

So in about a year and a half, the $50 fee to transfer the funds from Fidelity to Vanguard will have payed for itself, HAH!

Like I said, If I was aware of the account "exit fee", I would have left a dollar in the Fidelity account to avoid the $50 fee.

Live and learn.

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paul e
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Post by paul e » Wed Jul 29, 2009 7:54 am

I just transferred out of two American funds held at Smith Barney. They were held in an IRA and I wanted to combine them with my Vanguard IRA.. I got dinged with more than twice the fees you were hit with:
one was a '2009 Termination Fee' for $75, and the other was a $40 'Custodial Fee'..

Talking about BS.... you got off lightly!
Last edited by paul e on Wed Jul 29, 2009 8:21 am, edited 1 time in total.

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Post by Larry_M » Wed Jul 29, 2009 8:04 am

paul e wrote:I just transferred out of two American funds held at Smith Barney. They were held in an IRA and I wanted to combine them with my Vanguard IRA.. I got dinged with more than twice the fees you were hit with:
one was a '2009 Termination Fee' for $75, and the other was a $49 'Custodial Fee'..

Talking about BS.... you got off lightly!
Ouch! Sorry to hear about that.

Just keep reminding yourself how much money you are going to save over your investing lifetime by keeping annual fund fees low with Vangaurd...

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Post by livesoft » Wed Jul 29, 2009 8:15 am

I guess leaving $1 would work even if Fidelity charged you low balance fees year after year and then closed your account and charged you $50 for that anyways. It would be unlikely that they would come after you, but they might sell your debt to a collection agency.

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Post by Harold » Wed Jul 29, 2009 8:22 am

The fee is pretty clearly disclosed, not deceptively hidden small print.

I was concerned enough about it when I opened a Fidelity account a few years ago that I talked it over with the rep. After telling me that he hoped I didn't feel the need to close it for a long time (and visibly scoffing a bit over a $50 concern when low expense ratios and such more than saved that), he pointed out that if I did want to eventually move my funds, I could move substantially all of it and leave the account open, thereby avoiding the closing fee.

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Post by Larry_M » Wed Jul 29, 2009 8:26 am

Harold wrote:The fee is pretty clearly disclosed, not deceptively hidden small print.

Be that as it may, I missed it - so once again, I admit it is my own fault. I just wanted to point it out to other investors that may also not be aware of the exit fee. Lesson learned - I will be sure to not make a similar mistake again.

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Post by fishndoc » Wed Jul 29, 2009 8:27 am

Several years back I, too, was converted to a Boglehead, and when I moved my account from Merril Lynch to Vanguard, I was charged $100 per account. To make it even worse, they charged me the fee for each account: my mutual fund account, my brokerage account, my IRA, my roth IRA, my wife's IRA, etc, my 4 kid's UGMA accounts, etc.

Ended up spending $1300 in "transfer fees" :evil:

But, it was the best money I ever spent.

Wayne
" Successful investing involves doing just a few things right, and avoiding serious mistakes." - J. Bogle

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Post by jpsfranks » Wed Jul 29, 2009 8:27 am

Larry_M wrote:I just ran some numbers, and here are the annual fees (Fidelity vs Vanguard) for my current balance of $5500:

Fidelity fees = $42.90 / year
Vanguard fees = $10.45 / year
The only annoying maintenance fee I have encountered at Fidelity is a $10/year fee on index fund balances < $10k (most of their index funds have $10k minimums anyway but Fidelity Four-In-One does not and I got hit with it in my Roth). What were the fees that were costing you $42.90/year at Fidelity?

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Post by Harold » Wed Jul 29, 2009 8:33 am

Larry_M wrote:
Harold wrote:The fee is pretty clearly disclosed, not deceptively hidden small print.

Be that as it may, I missed it - so once again, I admit it is my own fault. I just wanted to point it out to other investors that may also not be aware of the exit fee. Lesson learned - I will be sure to not make a similar mistake again.
I wasn't being critical, just pointing out that Fidelity didn't hide it. Certainly it's worth pointing out to others to watch out for where companies are getting money out of us.

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Post by kaneohe » Wed Jul 29, 2009 8:34 am

Perhaps this was a blessing in disguise......to train you to always ask in the future if there is a cost associated w/ each action you are about to do. .......and to ask it multiple times of different CSRs if you have any doubt. Most firms have you on a recorded line and at least one of them I know was good enough to go back and "look" thru those records and reimburse me for a fee they charged me because they had told me repeated that there was no such fee.

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Post by Larry_M » Wed Jul 29, 2009 8:40 am

fishndoc wrote:Several years back I, too, was converted to a Boglehead, and when I moved my account from Merril Lynch to Vanguard, I was charged $100 per account. To make it even worse, they charged me the fee for each account: my mutual fund account, my brokerage account, my IRA, my roth IRA, my wife's IRA, etc, my 4 kid's UGMA accounts, etc.

Ended up spending $1300 in "transfer fees" :evil:

But, it was the best money I ever spent.

Wayne
Oh my, you just made me feel a lot better. OUCH!

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Post by Larry_M » Wed Jul 29, 2009 8:42 am

jpsfranks wrote:
Larry_M wrote:I just ran some numbers, and here are the annual fees (Fidelity vs Vanguard) for my current balance of $5500:

Fidelity fees = $42.90 / year
Vanguard fees = $10.45 / year
The only annoying maintenance fee I have encountered at Fidelity is a $10/year fee on index fund balances < $10k (most of their index funds have $10k minimums anyway but Fidelity Four-In-One does not and I got hit with it in my Roth). What were the fees that were costing you $42.90/year at Fidelity?
Oh sorry I wasn't clear. I was just pointing out the annual Fidelity Fee (0.78%) versus the annual Vanguard fee (0.18%) for a similar mutual fund. I was just commenting on how much more money I will save over my investing lifetime by switching over to Vanguard - makes the Fidelity $50 exit fee well worth it!

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Post by Larry_M » Wed Jul 29, 2009 8:44 am

Harold wrote:
Larry_M wrote:
Harold wrote:The fee is pretty clearly disclosed, not deceptively hidden small print.

Be that as it may, I missed it - so once again, I admit it is my own fault. I just wanted to point it out to other investors that may also not be aware of the exit fee. Lesson learned - I will be sure to not make a similar mistake again.
I wasn't being critical, just pointing out that Fidelity didn't hide it. Certainly it's worth pointing out to others to watch out for where companies are getting money out of us.
You are right for pointing out the fact that it isn't hidden or in small print. I was just venting because I was mad at myself for missing it! :evil:

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Post by nisiprius » Wed Jul 29, 2009 8:59 am

Since I'm in the process of transferring some assets from Fidelity to Vanguard, it would be instructive if you could dig out the exact details of what this fee is "for" and exactly what triggers it.

I hate any kind of account-closing fees, or any attempts to assess fees for withdrawing my own money. You have to balance the aggravation of the fee against the aggravation of fussing about it, though.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

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Post by Larry_M » Wed Jul 29, 2009 9:17 am

nisiprius wrote:Since I'm in the process of transferring some assets from Fidelity to Vanguard, it would be instructive if you could dig out the exact details of what this fee is "for" and exactly what triggers it.

I hate any kind of account-closing fees, or any attempts to assess fees for withdrawing my own money. You have to balance the aggravation of the fee against the aggravation of fussing about it, though.
I am happy if my little rant even helps 1 person from getting bit by this fee.

I am looking at my Fidelity account online right now, and this is the exact fee (wording in tact) as it appears on my account:

C/O FEE CHARGED RETIREMENT CLOSE FEE

Keep in mind that this is a Traditional IRA - not sure if that makes any difference or not...

Here are the actions I took that triggered the event:

Opened a "shell account" with Vanguard - zero balance.

Wanted to transfer 100% of my money from Fidelity to

Vanguard. I had only 1 mutual fund with Fidelity (was the retirement "Freedom Fund 2030").

In order to do that, I needed to sell all shares of the fund so that it would be liquidated into the Fidelity Cash Reserves ( FDRXX).

Then I mailed the proper transfer assets form to Vanguard (I forget the exact name of the form). But the information on the form indicated that I wanted Vangaurd to trasfer 100% of the money at Fidelity into my Vanguard account, into a specific mutual fund that I specified (One of the Target retirement funds).

A few days passed (behind the scenes I assume Vanguard is interacting with Fidelity to carry out my plan).

Then boom - I see that I am hit with the $50 fee.

Remember, my Fidelity account was a brokerage account - maybe those invested with Fidelity in a non-brokgerage account would not incur such a fee?

Good luck, and I hope you can avoid the fee.

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Post by Ron » Wed Jul 29, 2009 9:24 am

Sorry to sound "contrary", but if this is the only problem you have in your life, and wish to share on this forum, you are truly blessed, IMHO.

- Ron

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Post by zeusrock1 » Wed Jul 29, 2009 9:29 am

I believe most companies have a closing fee. $50 isn't too bad. I am also looking to go from Fidelity to Vanguard, but before I do I am converting our Trad IRAs into our Roths. They will close the traditional IRAs with no fee.

I will only be transfering 2 accounts instead of 4 : )

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Post by bish0p » Wed Jul 29, 2009 9:31 am

I transferred a ROTH IRA from Fidelity to Vanguard earlier this year. I wanted the transfer to occur smoothly, so I called Vanguard to help me. The Vanguard representative then called Fidelity. During our conference call the Fidelity representative was up front about the $50 fee.

The Vanguard and Fidelity reps were actually both helpful, they made the transfer easy.

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Post by Larry_M » Wed Jul 29, 2009 9:32 am

Ron wrote:Sorry to sound "contrary", but if this is the only problem you have in your life, and wish to share on this forum, you are truly blessed, IMHO.

- Ron
Yes sir, I agree 100%, hence the comment I made in the first post:

"I suppose that if this is the biggest investing mistake I ever make in my investing career, I got off lucky!"

Now outside of the realm of investing, I have considerably bigger problems than the loss of $50 to deal with (as I'm sure we all do). But I don't feel a need to share those problems in this forum since they aren't investing related, and I don't want to distract from the wonderful investment advice that I have thus far received.

:)

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Post by mikep » Wed Jul 29, 2009 9:48 am

This is standard practice to charge this fee (Vanguard I believe does not do it though). I transferred IRAs for my wife and me from E-trade to VG and there was $60 fee on each. They incur a small cost (human interaction to mail the check and a stamp) to close the acct, I don't agree with it but thats the way it is.

As Bogle would say another cost of the "financial system"

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Post by indexfundfan » Wed Jul 29, 2009 10:07 am

Some brokers receiving your assets would pay for your fee with the exit broker. Not Vanguard however.
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Post by fire5soon » Wed Jul 29, 2009 10:18 am

That $50 fee is only for an IRA. It is not for non-retirement accounts. There is no fee to close a non-retirement account.

The fee is waived for inherited IRAs.
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Wachovia/Evergreen fees

Post by shariron » Wed Jul 29, 2009 10:22 am

I remember pre-boglehead days when I had all my investments with Wachovia/Evergreen. Was very painful getting away from them as I transferred to Vanguard. Transfer fees, account closing fees, deferred sales chares. uugh. But when I did the math, even with all this, I still saved $'s in overall expenses by the end of year 1 by moving to Vanguard. Wish I would have know what I was doing from the beginning, but I was young and had no clue about investmnt costs. Live and learn I suppose. I try and make up for it by educating others who are as ignorant to costs as I once was.

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Post by camper » Wed Jul 29, 2009 11:34 am

Last month, I also paid the $50 fee to transfer my Fido Roth to my Vanguard Roth. I didn't like the fee, (who would?) but I like having a single Roth at Vanguard.

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Post by Chuck » Wed Jul 29, 2009 12:52 pm

So, if you know this fee is coming, and it will be per-fund, it's a good idea to exchange all of your funds into a single one before doing the transfer. (Like a balanced fund that approximates your AA somewhat. It doesn't have to be exact, because it will only be for a week or two.)

Bonus points if it's an asset that can be transferred in kind (usually won't work in any kind of IRA, though). Then you won't be out of the market while your new brokerage waits for the check.

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Post by tfb » Wed Jul 29, 2009 12:54 pm

Chuck wrote:So, if you know this fee is coming, and it will be per-fund, it's a good idea to exchange all of your funds into a single one before doing the transfer. (Like a balanced fund that approximates your AA somewhat. It doesn't have to be exact, because it will only be for a week or two.)

Bonus points if it's an asset that can be transferred in kind (usually won't work in any kind of IRA, though). Then you won't be out of the market while your new brokerage waits for the check.
It's not per fund. Transfer in kind works with IRA just fine.
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Post by smallcapvalue » Wed Jul 29, 2009 12:54 pm

I have a solution: Open up an ING Savings and get $25, then get $50 for a checking. I can give you a referral. Problem solved!

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Post by Chuck » Wed Jul 29, 2009 1:27 pm

tfb wrote:It's not per fund. Transfer in kind works with IRA just fine.
Right, I misread fishndoc's post, he was charged per account, not per fund.

When I transferred an IRA from NML to Vanguard, they said they could not do the transfer in kind. The only way was to liquidate, and transfer the cash. They said it was because it was an IRA. Yes, I suppose someone could have been lying. That's why I believed that transferring IRA assets in kind was harder.

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Post by ddb » Wed Jul 29, 2009 1:36 pm

Chuck wrote:
tfb wrote:It's not per fund. Transfer in kind works with IRA just fine.
Right, I misread fishndoc's post, he was charged per account, not per fund.

When I transferred an IRA from NML to Vanguard, they said they could not do the transfer in kind. The only way was to liquidate, and transfer the cash. They said it was because it was an IRA. Yes, I suppose someone could have been lying. That's why I believed that transferring IRA assets in kind was harder.
In-kind transfers are generally done between brokerage accounts. If you opened a direct mutual fund account with Vanguard (not VBS), then there is no transfer-in-kind, unless the account you're transferring from already holds Vanguard open-end funds.

- DDB
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Post by Larry_M » Wed Jul 29, 2009 2:14 pm

smallcapvalue wrote:I have a solution: Open up an ING Savings and get $25, then get $50 for a checking. I can give you a referral. Problem solved!
Thanks for the offer, but I already have an ING savings & checking account. :) Too bad they are tied to prime, so they are offering a dreadful interest rate at the moment. As a result I moved all of my ING funds over to my credit union (currently offering 3.25% interest). A shame really, because I really do like ING. If the rates ever go back up to 3.5% or higher, I will move my funds back over to ING because I really did enjoy banking with them (but I'm not holding my breath to see those rates any time soon).

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Post by tfb » Wed Jul 29, 2009 2:54 pm

ddb wrote:In-kind transfers are generally done between brokerage accounts. If you opened a direct mutual fund account with Vanguard (not VBS), then there is no transfer-in-kind, unless the account you're transferring from already holds Vanguard open-end funds.
Right. Whether you can transfer in-kind has more to do with the underlying assets and what the receiving account can hold, not with who owns those assets (single owner, joint, IRA).
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Post by ddb » Wed Jul 29, 2009 4:02 pm

Larry_M wrote:
smallcapvalue wrote:I have a solution: Open up an ING Savings and get $25, then get $50 for a checking. I can give you a referral. Problem solved!
Thanks for the offer, but I already have an ING savings & checking account. :) Too bad they are tied to prime, so they are offering a dreadful interest rate at the moment. As a result I moved all of my ING funds over to my credit union (currently offering 3.25% interest). A shame really, because I really do like ING. If the rates ever go back up to 3.5% or higher, I will move my funds back over to ING because I really did enjoy banking with them (but I'm not holding my breath to see those rates any time soon).
If you're getting 3.25% interest on an FDIC-insured savings or checking account, I'm sure many folks here would love to hear about who is offering this!

- DDB
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Re: A small rant about a fee I was hit with...

Post by sommerfeld » Wed Jul 29, 2009 4:34 pm

Larry_M wrote:Today I noticed that I got dinged with a $50 fee for closing my account with Fidelity. Does anyone else think this fee is complete B.S. or is this a normal fee charged by all of the fund families for closing an account?
Both.

Pretty much every financial institution out there will charge one or more B.S. nuisance fees when you say "hasta la vista, baby" to them.

Want to pay off your mortgage early? They'll ding you for a "recording cost" and a "payoff statement fee" and maybe even a "reconveyance fee".

Want to close out your bank account early? They give you a check, and then a couple days later you get a statement where they credit you with $0.01 in interest income, then hit you with a $5 low balance fee.

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Post by nisiprius » Wed Jul 29, 2009 5:18 pm

Harold wrote:The fee is pretty clearly disclosed, not deceptively hidden small print.
Not a big deal, really--but where is that fee "pretty clearly disclosed?"

Can you point me to a Web page that says that the fee is $50, spells out what kinds of account it applies to, and state what actions trigger it?

It's not in the fine print covering the last page of my printed statement. It's not in my "Features By Account" page. Typing in "Account Fees" into their search box gives a confusing mass of 95 hits.

Picking a likely one, the page on Individual IRAs does say
There is no brokerage account fee on Fidelity's Traditional, Roth, SEP, and Rollover IRAs. Fund expenses and brokerage commissions still apply. Depending on your situation, fees may include low-balance fees, short-term trading fees and account closing fees.
, but there's no further link.

Using their website's search box on "account closing fee" in quotes also yields 13 hits, but as nearly as I can tell, they are all similar fine-print statements which do disclose the existence of the fee, but don't say how much it is or any other details.

The online Brokerage Handbook has a section on fees, but discusses only trading fees.
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Post by Harold » Wed Jul 29, 2009 5:54 pm

nisiprius wrote:
Harold wrote:The fee is pretty clearly disclosed, not deceptively hidden small print.
Not a big deal, really--but where is that fee "pretty clearly disclosed?"
My sentence did leave out some words. What I should have written:

The fee was pretty clearly disclosed to me on the forms I used, and at the time I applied, not deceptively hidden small print.

I distinctly remember scanning through the documents and saying "hey, I want X account instead of the brokerage account, because of that $50 closing fee". It wasn't hidden to me.

If I have time tomorrow morning maybe, I'll scan through the Fidelity website to see where. I suspect it's just stepping through the pages as if one were applying for an account, when the fee gets mentioned.

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wander
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Post by wander » Wed Jul 29, 2009 6:12 pm

Below is the link to Fidelity Fee information.

FYI,
Close Account $50 per account for Fidelity IRAs (excluding SIMPLE IRAs),
Keogh Accounts, and Fidelity HSAs

ADDITIONAL INFORMATION

Years before, I transferred an IRA account from Janus to T.Rowe Price. Janus did not charge me anything.

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Post by tfb » Wed Jul 29, 2009 6:19 pm

Harold wrote:
nisiprius wrote:
Harold wrote:The fee is pretty clearly disclosed, not deceptively hidden small print.
Not a big deal, really--but where is that fee "pretty clearly disclosed?"
My sentence did leave out some words. What I should have written:

The fee was pretty clearly disclosed to me on the forms I used, and at the time I applied, not deceptively hidden small print.

I distinctly remember scanning through the documents and saying "hey, I want X account instead of the brokerage account, because of that $50 closing fee". It wasn't hidden to me.

If I have time tomorrow morning maybe, I'll scan through the Fidelity website to see where. I suspect it's just stepping through the pages as if one were applying for an account, when the fee gets mentioned.
Yes, it's in the account application.

https://scs.fidelity.com/accounts/servi ... ource=aong
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Post by Fbone » Wed Jul 29, 2009 9:20 pm

And I transferred from Vanguard to Fidelity because Vanguard hit me with an annual account fee $20 for each fund and $30 annual brokerage fee. Missed that small print myself. I dont recall a closing fee, though.

Vanguard may not be the best option for someone with few investing assets.

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Larry_M
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Post by Larry_M » Thu Jul 30, 2009 10:26 am

ddb wrote: If you're getting 3.25% interest on an FDIC-insured savings or checking account, I'm sure many folks here would love to hear about who is offering this!
- DDB
FDIC no, ESI insured, yes.

I've been enjoying a 3.25% interest on my account for quite a while now (for balances of $25,000 or less).

Here you go:

http://www.goabco.org/

I'm afraid you are probably hosed unless you live in New Jersey though, as it is a relatively small credit union.

Actually, there are even better interest rates than 3.25% out there right now offered by small credit unions and banks, you just need to look around a little bit...

I just did a quick search on CheckingFinder.com that is currently offering a 4.51% rate on balances up to $25,000.

Default User BR
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Post by Default User BR » Thu Jul 30, 2009 1:41 pm

Larry_M wrote: I just did a quick search on CheckingFinder.com that is currently offering a 4.51% rate on balances up to $25,000.
Most of these high-rate accounts have "qualifications" that must be met each month to get the rate. That usually requires some large number of debit card transactions (I've seen as high as 15 per month).



Brian

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ElJay
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Re: A small rant about a fee I was hit with...

Post by ElJay » Thu Jul 30, 2009 2:49 pm

When I closed my account with Edward Jones, they dinged me with the annual account fee of $40 (non-prorated) and their $50 account closure fee at the same time. Over the six months I had an account with Edward Jones I paid $130 in fees, not including the 5.75% load or fund fees. I guess they wanted to extract maximum fees from me since I'll never be back.

I got a postcard last week saying they've now upped that $50 closure fee to $95! This was sent to me from another Edward Jones office that thinks I'm their customer after a relative of mine purchased some stock for me as a gift a decade ago. This also gives me access to other lame notices like their marketing kickback disclosures for various mutual fund companies.

I have never paid an account fee to Vanguard thanks to their e-statements exemption. I am happy to not have my mailbox overflowing with personal information.

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Boglenaut
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Re: A small rant about a fee I was hit with...

Post by Boglenaut » Thu Jul 30, 2009 4:18 pm

Larry_M wrote:Let me preface this by saying that in the end, it is my own fault for not reading the fine print.

With that said, here is my story:

So I have (should say: had) an account with Fidelity. After being converted to the Boglehead way of investing, I decided to move my money from Fidelity to Vanguard. After a few calls to Vanguard, my new account was set up, and I was armed with all of the info/paperwork required to get the money transferred over to Vanguard. I decided to go all in, and move all of the money from the Fidelity to the Vangaurd account.

Everything went smoothly, but today I noticed that I got dinged with a $50 fee for closing my account with Fidelity. Does anyone else think this fee is complete B.S. or is this a normal fee charged by all of the fund families for closing an account? Does Vanguard charge such a fee for closing an account?

I am probably over reacting a little bit, but I must admit that this fee really put my knickers in a twist. As I mentioned in the beginning of this post, it is more than likely my own fault for not reading the fine print - I would like to assume that somewhere in the small print, Fidelity listed this fee.

If I would have known about this fee, I would have left a dollar (or whatever the minimum allowed by Fidelity) to remain in the Fidelity account just to avoid the $50 fee.

At any rate, let this be a cautionary tale for other new investors - don't make this mistake. $50 compounded annually over 30 years at an interest rate of 8% is 500ish bucks before taxes and inflation - Ouch!

I will chalk it up to a learning experience - I always make it a point to learn from my (and others) mistakes, and grow wiser as a result. I suppose that if this is the biggest investing mistake I ever make in my investing career, I got off lucky! :) I will not let it bother me too much, since I am escaping a 0.78% annual fund fee (at Fidelity) and investing in an equivalent indexed fund at Vanguard with a 0.19% annual expense. So another way to look at this situation is that it was $50 well spent to go from Fidelity to Vanguard...
Most brokerages charge a fee like this.. a few are zero, some are $75. Fidelity discloses it.

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nisiprius
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Post by nisiprius » Thu Jul 30, 2009 7:44 pm

wander wrote:Below is the link to Fidelity Fee information.

Close Account $50 per account for Fidelity IRAs (excluding SIMPLE IRAs),
Keogh Accounts, and Fidelity HSAs

ADDITIONAL INFORMATION
Thanks!

The first of the those two is very good--I'm sticking it in the computer folder where I keep my brokerage stuff.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

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Larry_M
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Post by Larry_M » Fri Jul 31, 2009 11:10 am

Default User BR wrote:
Larry_M wrote: I just did a quick search on CheckingFinder.com that is currently offering a 4.51% rate on balances up to $25,000.
Most of these high-rate accounts have "qualifications" that must be met each month to get the rate. That usually requires some large number of debit card transactions (I've seen as high as 15 per month).



Brian
And?

My credit union requirements:

10 Debit card transactions / month - I easily average 15/month.

Use online bill pay once per month - I use this FREE service to send payment to my water utility company, since they are not set up properly to accept electronic payment. Saves me a stamp and a check.

Access online banking at least once per month - I check my online account at least 1 or 2 times per day.

Agree to receive electronic statements - no problem here.

So I easily earn the 3.25% interest rate without even trying. Piece of cake.
Last edited by Larry_M on Fri Jul 31, 2009 11:15 am, edited 2 times in total.

Topic Author
Larry_M
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Post by Larry_M » Fri Jul 31, 2009 11:12 am

Oops, double post!

azxcvbnm321
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Post by azxcvbnm321 » Fri Jul 31, 2009 1:25 pm

$50 is very modest, you are lucky. In reality, it does take some time and effort for them to hand off your securities to another brokerage. In the old days, you had to physically deliver the certificates, usually by bike courier from one brokerage to another. I think that's where the closing fees came from. Today, you have to just coordinate and it's done electronically. Still, you need some grunt to fill out some paperwork and type in entries.

Default User BR
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Post by Default User BR » Fri Jul 31, 2009 4:27 pm

Larry_M wrote:
Default User BR wrote:
Larry_M wrote: I just did a quick search on CheckingFinder.com that is currently offering a 4.51% rate on balances up to $25,000.
Most of these high-rate accounts have "qualifications" that must be met each month to get the rate. That usually requires some large number of debit card transactions (I've seen as high as 15 per month).
And?

My credit union requirements:

10 Debit card transactions / month - I easily average 15/month.
1. I think debit cards are evil. I use credit cards which carry cash-back on purchases and come with numerous built-in protections.

2. Ten's easy for you? Great. Wouldn't be easy for me.


The main point is that it's an apples to . . . apples with some other stuff comparison. It's not a simple as finding a great rate at one of these institutions. The user has to be aware of the requirements and be prepared to jump through every hoop every month.



Brian

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modal
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Post by modal » Fri Jul 31, 2009 4:50 pm

I got hit with $75 fee per account transferred to Vanguard from Chase.

:x

Chase took forever to transfer the money too.

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