retirement funds agent fees

[pavulon]

I've sat through a sales pitch from a local Ed Jones agent. They proposed my rolling over a fair bit of $$ (high 6 digits) from a former employer to her for active management through a program from Edward Jones. The agent is proposing a 1% annual fee be paid to her for this service.

Opinions?

[Sooner or later]

If the advisor actually knows what they are doing they might beat an index portfolio. If they don't know what they are doing they will cost you money.

Did they present specific performance numbers compared to a passive plan of similar risk?

[pavulon]

Originally Posted by Sooner or later

Did they present specific performance numbers compared to a passive plan of similar risk?

No specific performance numbers. Mostly a wall of verbiage and some small boasts. I was pitched something called Edward Jones Advisory solutions

[KNS]

I'm with EJ Advisory Solutions. Off the top of my head I don't know what the fees are but the portfolio is doing very well. But then again, the whole market is doing well.

[VincentVega]

I'd want to see some clear historical info to warrant any fees. Dont forget you still owe the fee of whatever they put you in. Hard to beat the old balanced free/cheap funds from one of the major players. Nothing wrong with paying for the pro to talk your through it, just know what you are getting into.

[masraum]

2 things

1 they are unlikely to beat low cost index funds. If they do well, they might match them.

2 when you consider the fees for active management, they are even more unlikely to beat index funds (once you've deducted the fees).

I would pass.

[Crowbob]

Speaking of retirement funds. The mandatory age that required minimum distribution is to commence was upped from 70.5 I think to age 75(?). So for a guy whose now 65 is there some simple rule of thumb as to when and if it’s a good idea to roll over 401K’s to Roth?

I do know the strategery is to try to avoid moving into a higher tax bracket but that seems nearly impossible for my friend who is a poverty-struck looser on the fixed-income dole currently in the 12% bracket.

What should I tell him to do?

[Sooner or later]

If he is rolling from a traditional 401k he will owe taxes on the rollover amount.

[LWJ]

Maybe.

I pay my guy 1%. It is for part of my portfolio. He advises me on all of my portfolio so I get a bit of a deal.

I value a disinterested third party opinion as well as a dedicated focus on keeping me in the black.

For me (who is a tightwad) this is easy money to spend.

My guy is independent with an affiliation through LPL. Prior guy was one big Wall Street names, but I am forgetting. He wasn't very good.

[pavulon]

Originally Posted by Sooner or later

If he is rolling from a traditional 401k he will owe taxes on the rollover amount.

It's a 403b.

[ckelly78z]

I have always handled my own decisions about investments, and have usually beat the DJIA, and the S&P 500. I can't imagine paying someone 1% of my $$ every year. I will have to consult a tax advisor, but not about my investments.

[wdfifteen]

You are going to give him 1 percent of your portfolio every year. Think about that. Is the advice given to client A who has $2 million under management twice as good the advice given for client B’s $1million account?
The whole arrangement stinks. Pay a fee-only advisor a flat rate for a tune-up every couple of years.

[Bill Douglas]

Suggest to him a certain percentage of the profits, and have a good look at his facial expressions. This will give an idea as to whether or not he makes any money for you, other than just for himself.

[pwd72s]

Originally Posted by pavulon

I've sat through a sales pitch from a local Ed Jones agent. They proposed my rolling over a fair bit of $$ (high 6 digits) from a former employer to her for active management through a program from Edward Jones. The agent is proposing a 1% annual fee be paid to her for this service.

Opinions?

Don't sign anything! Until you've read this book:

The Bogleheads Guide to retirement planning

Taylor Larimore, Mel Lindauer, Richard A. Ferri, Laura F. Dogu

[wayner]

Originally Posted by wdfifteen

You are going to give him 1 percent of your portfolio every year. Think about that. Is the advice given to client A who has $2 million under management twice as good the advice given for client B’s $1million account?
The whole arrangement stinks. Pay a fee-only advisor a flat rate for a tune-up every couple of years.

I think the idea with 1% is that they no longer charge for trades, so there is no incentive to churn your account. Instead they are guaranteed their money and in theory, should only make trades because it makes YOU more money, not just them.

The question is two fold:

1) Do you want to pay someone to manager you money (or not)
2) What is the best way to pay them if you do. (Is it per trade or flat fee)

[VincentVega]

I think the idea with 1% is that they no longer charge for trades

Maybe, but no one charges for trades anymore. A flat fee every year or so to legit 3rd party is a solid plan if you want the advice. Different strokes. But, paying someone 1% to tell me what funds I should be in? No thanks.

If you havent checkout the 3,5,10 yr return on t rowe price and vanguard target funds. Ask your guy to see his #s, including fees, over the same time periods. Simple math, is he worth the $$?

[RWebb]

I'll be the 3rd person to say you'd better have a very good reason to not just go with 2-3 low cost index funds.

E Jones is pitched as a small town type investment advisory firm. I dunno their performance, but I DO KNOW that over ~~10 years their performance will revert to the mean.

also, 1% is not huge off the top of a stock fund; it will kill bond fund returns however.

The real issue is whether 1% is a fair amount to pay for psychological comfort....

[biosurfer1]

Originally Posted by RWebb

.

also, 1% is not huge off the top of a stock fund; it will kill bond fund returns however.....

That's true until a down year. Nothing like being down, say, 10%, and having to fork over another 1% to the guy who told you what to do.

[RWebb]

very true; the purpose of a stock fund is many years, long term...

and if it gives psychological comfort....

[group911@aol.co]

This advice from some hayseed out of Nebraska
https://www.forbes.com/sites/enriquedans/2019/09/01/surprise-surprise-warren-buffet-was-right-machine-managed-investment-is-a-betterbet/#166497ef1f64