How do I exit my deal with Edward Jones?

December 9, 2024 7:47 AM

I understand all the math and enough of the financial instruments. I am somewhat embarrassingly ignorant of the actual details of how I can manage my portfolio without paying someone to do it for me.

I started an IRA with Edward Jones several years ago. I like the guy alright, and I did it mostly to encourage myself to get started saving more seriously. Time goes by, I don't really use the services I'm paying for, I no longer live in that state, and the main guy's office is growing and he handed me off to his new junior partner. For all these reasons I'd rather just park my account someplace else and tinker with it only minimally and avoid the fees. But I don't know what that looks like or what my options are. Yes I will be meeting with these people and asking them but I'd rather not go into that meeting as uninformed as I currently feel, so please tell me how you did something similar or what kinds of options you might suggest. Or if you think I'm better off staying given my lack of interest and knowledge, I'm willing to entertain that too. I don't think any of the details of the accounts are that pertinent to the general question but if that is wrong I can provide more info.

Thanks!

posted by SaltySalticid to Work & Money (22 answers total)

IMHO its an absolute racket for Edward Jones to manage an IRA.

What do you want to do? Have funds with no fees? Do you need this money now?

Fidelity has funds with no fees. But the easiest thing is to dump your money in a Vanguard target date fund. There will be fees but its absolutely no tinkering at all.

Highly recommend r/Boglehead.
posted by MisantropicPainforest at 7:54 AM on December 9 [8 favorites]

Once you choose your new broker, they should be able to handle everything for you; if not, they will tell you want you need to do. Vanguard, Fidelity, and Schwab are all large, reputable, low-fee brokers. If you'd like the convenience of a physical office, you could just pick the one that's most convenient to you. They will also give you basic guidance on picking investments, if you want.
posted by Mr.Know-it-some at 7:56 AM on December 9 [8 favorites]

Mr.Know-it-some has it. Find someone who will better fit your needs, and they will cheerfully handhold you through the actual transfer.
posted by Blue Jello Elf at 8:03 AM on December 9 [2 favorites]

You want to transfer the IRA to Vanguard, Fidelity, or Schwab. All of those brokers can do the transfer easily. The money should be in a simple target-date fund or similar. Start here.
posted by Mid at 8:10 AM on December 9 [2 favorites]

Response by poster: Right, should have said I don't want/need this money access to this money now or soon. I also have a smaller non-IRA account that I thought I might do stuff with, but mostly haven't. I'm happy to keep this sitting in mutual funds and bonds and whatever for say 20 years, barring extreme and unexpected emergencies.

Are Vanguard Fidelity and Schwab really all that different or less expensive that Jones? I thought they were roughly comparable but since a few people mention them I'm guessing maybe I was wrong about that and maybe they are better for my simple needs. Since it's kind of funny, I'll tell you the story that I signed up because this guy literally knocked on my door around the time I was thinking I should start saving more, and then after a week or so he came back and I said you know what sure. Obviously not the best method of choosing brokers but I kind of loathe finance and I did like the guy and I'm pretty sure I have more money saved now than I would have if I didn't take this path of least resistance. My thought is that I'm probably paying too much considering I'm not asking hardly anything from them. I feel like I can in principle do whatever light management myself but in practice maybe it's better for me to have a local office and person I can talk to.

So it looks like the main consensus is to pick a broker, talk to them, then talk to Jones and have them work out the transfer? I do sort of like having a real person/office to talk to, but I'm not sure if it's worth what that costs.
posted by SaltySalticid at 8:30 AM on December 9

Well Fidelity has free funds, Vanguard has VOO which has an expense ratio of 0.03 so like 30 bucks a year if they manage 100k.

How much are you paying for edward jones? I can't imagine its cheaper. Edward jones is basically predatory. They're not doing anything shady or illegal other than charging people who don't know better wayyyyy more than they should be paying. I read that their fees can be upwards of 1%, which is gross.

Also Ally and a bunch of other sites have 'robo traders', basically if you have money that's not in a tax free account and not part of an emergency fund, you select your risk tolerance and it will automatically select funds for you. Ally has two tiers, one with a fee and one without.

For reference: edward jones on bogleheads
posted by MisantropicPainforest at 8:45 AM on December 9 [2 favorites]

If you're happy to leave the money sitting for that long, just go with Vanguard and dump it into the "three-fund portfolio."

Or Fidelity, if they have a branch office near you and you like having a physical location to conduct business in.
posted by aramaic at 8:50 AM on December 9 [2 favorites]

Are Vanguard Fidelity and Schwab really all that different or less expensive that Jones?

Yes. They have very different business models. Vanguard, Fidelity, and Schwab compete with each other on low fee funds that are designed for you to purchase and manage yourself. Edward Jones sells high fee products to people who don't feel comfortable managing a portfolio, wrapped in another layer of fees based on the amount of money you have with them.

If you educate yourself on the basics, managing a portfolio (which can be as simple as an all-in-one target date fund as mentioned above), is not complicated.
posted by AndrewInDC at 8:50 AM on December 9 [6 favorites]

If you are committed to managing your money on your own Schwab, Fidelity, and especially Vanguard are the lowest cost options. You can get as simple as the target date funds mentioned above and as complex as you are comfortable with.

Are these your fees at Jones?:

Traditional and Roth Individual Retirement Accounts (IRAs): $75.00 per calendar year, not prorated
SEP and SIMPLE IRAs: $40.00 per calendar year, not prorated

Or are you being billed for personalized management as a percent of assets? If so, what's the percentage?

P.S. I'm a financial advisor and the details of your accounts and, most importantly, your life do matter to these decisions.
posted by FerrisWren at 8:51 AM on December 9 [3 favorites]

You can certainly do the low-fee vanguard stuff, but depending on the firm, and the amount of money you are talking about, things can get weird.

I am a big fan of Fiduciary firms. Won't buy into commissioned products, and only charge you based on the value of your portfolio.

Avoid JP Morgan. We have two trusts, set up by my parents. And they have moved around between various firms. After a near-death medical situation I had two years ago, we realized the the wordings of those trusts were terrible. Got them redone, and tried to leave JPM.

But they had invested in instruments that could not be transferred to another firm. So we got hit with a ridiculous tax bill, as they had to be sold and transferred, giving us ridiculous capital gains. F those guys.

Haven't done Jones. If you are not trading and such, just buy and hold and monthly infusions, no-load funds are a good bet. Not sure how much you are being charged, but if you are paying for managed account services, but you are just sitting on stuff, find the cheapest deal. If they are "managing your portfolio", and not really doing anything, that's a bad deal for you
posted by Windopaene at 8:51 AM on December 9 [1 favorite]

Like FerrisWren said, it depends on what fees you are paying (and they are not alway obvious).

But "this guy literally knocked on my door"

How many doors do you think he knocked on before making a sale? How many hours do you think he spent? Because whatever fees you pay have to make it worth it for him to spend all that time knocking on doors.
posted by Mr.Know-it-some at 8:55 AM on December 9 [2 favorites]

I will tell you about my experience moving from Edward Jones to Vanguard. It was very easy. I started an IRA with Edward Jones when I left my first job and had to make a decision about what to do with my 401K. The Edward Jones office was next to my new office and it was easy to move over. In addition to the fees charged by the funds I was invested in, which were slightly over 1%, Edward Jones also charged me $40/year to have an IRA account (I was young and it had a low balance).

When the $40/year was raised to $70/year, that was the impetus I needed. I went online to Vanguard, opened an IRA (traditional same as the one I had at EJ), there was some "know your customer" procedures (scan of photo id, etc) then the account was open. I selected a rollover option and provided my EJ account number, etc. Within a few days, I got an e-mail from Vanguard telling me the money had transferred.

I then needed to select a fund at Vanguard to invest in. I chose the Total (US) Stock Market fun and the Total (US) Bond Fund, and made an allocation between them of 60/40. I could have selected a single Target-date fund or been more aggressive in the weighting of stocks, but this was what I went with based on the old (perhaps outdated) rule of thumb that you should have a percentage of stocks equal to 100 minus your age and the rest in bonds.

I no longer have the yearly fee for my IRA and the fund expenses went from over 1% to less than 1/10% as pointed out by others above.

I did not have to talk to anyone at Edward Jones and the whole thing was conducted online solely through Vanguard.

I would encourage you to do this sooner rather than later. Vanguard's online portal is easy to use (I assume Fidelity and Schwab are similar) and you are not using the Edward Jones services that you are paying for. The whole process was quick and easy and the only research required on my part was on how to allocate my balance. Don't wait and don't let another year pass!
posted by statusquoante at 9:25 AM on December 9 [8 favorites]

Response by poster: Yes I do know these folks are getting paid by charging me to handle my money. I know the details of my accounts and life situation matter for specific investment decisions. I am a little concerned about some of the investments not being able to be transferred as mentioned above, but I'll cross that bridge when I come to it. I'm comfortable assuming I am paying too much, that's why I want to quit. It seems I was indeed in error about EJ compared to the others.

This has been helpful. As I said, I understand the math and enough of the various instruments etc, just not the practice of who I can or should do business with for what. It looks like I will be checking out Vanguard or Fidelity, or maybe Schwab if I decide I want a local office. Interestingly enough there's around ten EJ offices in my town, and one Schwab. So that probably says something about their models or my town idk.

I think I mostly have the shape of it and I am reassured by the heavy overlap in suggestions, but I will still welcome any additional comments and suggestions. Thanks!

edit: and shout out to statusquoant for the exact experience I was looking for!
posted by SaltySalticid at 9:25 AM on December 9

It is pretty easy to roll over an IRA. Here are the instructions for Vanguard. It looks like you will have to contact Edward Jones and fill out a form on their end. Don't be embarrassed - just tell them you decided that X better meets your needs and you want to roll over your account. You don't have to explain beyond that although they will probably make at least a passing effort to get you to stay.
posted by metahawk at 9:27 AM on December 9 [2 favorites]

Yes, please ditch Edward Jones as soon as possible and transfer everything to an IRA at Fidelity or Schwab.

(My accounts are at Vanguard. The funds are good, but Vanguard's website and customer service has been getting worse, and they've begun charging people to transfer their accounts elsewhere, which worries me. Luckily, you can buy Vanguard ETFs at any brokerage. If I were starting over today, I'd go with Fidelity or Schwab.)

I don't know about Edward Jones specifically, but here's how the business works: the funds you hold at Edward Jones are probably loaded, most commonly with an up front sales charge (maybe 5%). So you automatically lose 5% when they invest your money. You also pay the fund's expense fee, which is probably around 1.25%. Edward Jones is likely also charging you an Assets Under Management (AUM) fee of about 1%, which is the main way an advisor gets paid.

So now no matter how your investments perform, you're down 5% of the money you put in, plus another ~2% of the total value of the account. If the market goes up 6%, Edward Jones takes 2% and you get 4%.

With that money invested in a low fee index fund at Fidelity or Schwab, you'd pay no sales charge, no AUM fee, and an expense fee of around 0.04%. If the market goes up 6%, you keep 5.96%. Pretty good!

Edward Jones might also be recommending several trades a year, based on market conditions. (Not just reinvestment/rebalancing.) Your advisor may sincerely believe they're helping (they're just following EJ's guidance, which they believe to be good) but the real reason they do this is to generate income through sales charges, and to make it seem like this stuff is so complicated you need an advisor managing it for you.

You don't need an advisor, you don't need a robo-advisor. You don't need to pay an AUM fee. Several folks here have shared links to info on the Bogleheads approach to investing. That's the good stuff. Read up on that. It's very simple! The hard part is unlearning all the investment advisor smokescreen and learning how simple investing can be.
posted by sportbucket at 9:29 AM on December 9 [3 favorites]

You have three kinds of expenses to worry about here
1. the annual fee for them managing an IRA
2. commission that get paid when you buy or sell stocks or mutual funds in your account. With mutual funds, they often has different categories within the same fund with different commission rates that gets paid to your broker (EJ). With the big low-cost funds, they either offer funds without commissions or you have the option to get the no fee/lower fee version
3. annual share of profits that the mutual fund company keeps for their cost of running their fund. Vanguard's own mutual funds have some of the very lowest fees in the industry so you get higher payouts for the same market returns.

One of the problems with Edward Jones is not just their direct fees but also they tend to put their clients in mutual funds that cost more since that is where they make their commission.
posted by metahawk at 9:32 AM on December 9

I have nothing to add other than I’m at Edward Jones too, and I appreciate this thread for getting me out! I tried to “quit” last year when I was truly in financial and medical duress and I got totally browbeaten by my advisor. I sort of forgot the whole thing (due to duress) and this is the kick I need to leave too.
posted by seemoorglass at 9:44 AM on December 9 [6 favorites]

I have self managed accounts at Vanguard and they are surprisingly easy to navigate.

A wiseman once told me there two views of the market, one view thinks that the market just grows so investing in something like SP 500 index fund is the way to go and the other view is that you can do research and make informed trades and "beat the market".
posted by MadMadam at 10:40 AM on December 9

Within an IRA, you can liquidate out of the funds without tax consequence before you transfer them as cash. You can also most likely transfer the funds "in kind" to Vanguard, and then either a) figure out whether you really want to stay in that fund, or b) engage Vanguard's Personal Advisory Service (fee of 0.3%, no/low commitment) to help you figure it out.

First step is to open an IRA at Vanguard. And I'll nth the advice to use Bogleheads and Investopedia as good sources of information.
posted by Dashy at 10:48 AM on December 9 [1 favorite]

I am a little concerned about some of the investments not being able to be transferred

This can be an issue for regular accounts, because in some cases you have to sell an asset and then transfer the cash, and there could be tax costs. But for an IRA, there are no tax issues until you withdraw, so Edward Jones can just sell your assets, transfer the cash to the new custodian, and then you can buy whatever you want, with no tax consequences. It looks like Edward Jones might charge some fees for selling assets, but you'd be paying those at some point anyway.
posted by Mr.Know-it-some at 10:59 AM on December 9 [2 favorites]

A wiseman once told me there two views of the market, one view thinks that the market just grows so investing in something like SP 500 index fund is the way to go and the other view is that you can do research and make informed trades and "beat the market".

A sly wiseman would tell you that statistically, the accounts that make the most money are owned by dead people and/or by people who literally forget they have them, so make sure you choose lazily.
posted by The_Vegetables at 12:33 PM on December 9 [1 favorite]

The game is rigged and regular folks like us can't beat the market. You'd have to be a billionaire, with all their inside knowledge and access....wait, wait, this just in: Billionaires underperform the S&P 500.
posted by Mr.Know-it-some at 12:53 PM on December 9