Switching from high expense ration funds to Vanguard funds

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hummingbird47
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Joined: Wed Sep 08, 2021 10:54 pm

Switching from high expense ration funds to Vanguard funds

Post by hummingbird47 »

This is my first post. I'm a 75-year-old retired teacher who's investment knowledge is self-taught. When I retired 16 years ago, I moved my 403b funds into an Edward Jones account because I didn't know better. Thankfully, it isn't a managed account. For more than a decade, I chose my stocks and have been happy with choices. About 5 years ago, as I hit 70, I wondered if I should reduce my 100% stock weight and EJ agent happily led me to mutual funds that EJ offers. Clearly, my self-knowledge was inadequate to evaluate that guidance. Now, after reading The Bogleheads' Guide to Investing, twice, many other investment books, subscribing to Kiplinger's Personal Finance, getting a daily feed from Motley Fools, etc. I'm not happy with the expense ratios on my "chosen" mutual funds. I am not tapping into my investments for living expenses and usually reinvest my RMD. This year I did give my RMD to a QCD rather than reinvest. Here's my main question: I feel no confidence in trying to figure out how to take underperforming/high expense ratio EJ mutual funds from both my taxable and pre-tax accounts and move to Vanguard. The only advantage to EJ is that there is a brick and mortar entity to visit.
I gave the Boglehead investing book to my 25-year-old grandson and he embraced the concept immediately, opened three Vanguard accounts and passed the book on to a friend. Unfortunately, he lives hundreds of miles away and has little time to help his grandmother do the same.

I'd just like some simple steps to open Vanguard funds and transfer my EJ funds to them. I know my EJ agent will throw a fit but so be it. I live in a small rural town and know no one to talk to about Vanguard. I will look on this site and see if there may be a Boglehead meeting somewhere within an hour's drive. Thank you for any help.
Doctor Rhythm
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Re: Switching from high expense ration funds to Vanguard funds

Post by Doctor Rhythm »

Welcome to the forum. Good to hear you’re moving from EJ to another brokerage.

There’s nothing special about Vanguard - they’re simply one of several large firms that offer low cost index funds and the tools needed to manage your portfolio. If you would like in-person assistance for this transfer, Vanguard won’t be able to provide it as they don’t maintain a network of local branches. Thus, I would look to see if there is a Fidelity or Schwab branch near your home and make an appointment there instead. They offer the same services and equivalent funds to the one you might have purchased at Vanguard. They will happily handle the transfer mechanics from EJ, so you don’t need to deal with EJ yourself. Once you’ve picked a firm, you can ask the forum for the names of their index funds for each asset class.

I have accounts at all three of the firms mentioned — they’re all fine.
Last edited by Doctor Rhythm on Thu Jan 20, 2022 3:13 pm, edited 1 time in total.
GP813
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Re: Switching from high expense ration funds to Vanguard funds

Post by GP813 »

A Schwab advisor won't automatically put you in low expense ratio funds, you have to watch what they select for you no matter where you go. Vanguard is also starting to promote managed funds so watch out for that too, just stick to broadly diversified market based passive indexes appropriate for your age and risk tolerance. You might want to call Vanguard Personal Advisor Service just for a consultation. They charge .30% AUM or lower the more money you have, but if you have many active managed funds at Edward Jones you could be paying much higher expense ratios for your funds. You said your EJ account isn't managed so that's good but from what people have told me of EJ advisors they load up on all kinds of fees.

Vanguard has VTI(ETF)/VTSAX(mutual fund) - United States total stock market
Vanguard has VOO(ETF)/VFIAX(mutual fund) - United States S&P 500 index
Vanguard has VXUS(ETF)/VTIAX(mutual fund) - Total International stock market
Vanguard has BND(ETF)/VBTLX(mutual fund) - United States total bond market trends towards intermediate term


All these have super low expense ratios and transparent distributions as good examples for funds/etf's to select.
Last edited by GP813 on Thu Jan 20, 2022 3:44 pm, edited 2 times in total.
dbr
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Re: Switching from high expense ration funds to Vanguard funds

Post by dbr »

I would second the observation that using an advisor at Schwab, Fidelity, or even Vanguard will not necessarily result in being in the funds you want. In fact one thing you want to avoid is getting signed up for advice at any of those if you don't want the advisory relationship and to pay for it. Asking for customer service assistance at a local office is fine, but you have to be clear that you know what you want.

If one prefers to broker at Fidelity, for example, you can hold Vanguard ETFs there perfectly well.
Jack FFR1846
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Re: Switching from high expense ration funds to Vanguard funds

Post by Jack FFR1846 »

Near me are Fidelity, Schwab and TDAmeritrade brick and mortar buildings. I have had accounts with all 3 and all 3 have been most helpful and the person you call on their 800 number helps you anytime you want. Heck....my first transfer of an account, I literally decided to move to Fidelity at 3am on a Sunday morning. I had to clarify something in the online process and the customer service person lead me through it and I completed it quickly.

How you make your switch: Contact whoever you decide you're going with. Tell them what you want to do. You'll need your latest statement and what each account and account number is. Then sit back. They do the rest. I'm sure if you want to walk into a Schwab or Fidelity store, they'll help you right there to get this done.

I'll emphasize that there is zero need to talk with the Edward Jones person.
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backpacker61
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Re: Switching from high expense ration funds to Vanguard funds

Post by backpacker61 »

Vanguard is a fine choice. I've had an account with them since 1989.

I expect to die still having an account there. My heir also has an account there, which will make their handling of the inheritance from me easier. There is an advantage to having an account at the same firm your grandson uses if you expect you may want his help some day (my parents had a Vanguard account; when the last of them passed, it was helpful to me as trustee that my parents, sibling and I all had accounts there).

You can initiate the transfer by contacting Vanguard. You can just call their 1-800 number, and they will help you open an empty account and then transfer the assets from Edward Jones into it. Once the funds are there, you can select your own mutual funds or ETF's, discuss it with your grandson or other people here on the forum who will be happy to help. Vanguard also has an advisory service which is quite cheap at 0.3% AUM per year, although you don't have to use it to have an account there.

First step, though, is to open the empty accounts and move the assets.
“Now shall I walk or shall I ride? | 'Ride,' Pleasure said; | 'Walk,' Joy replied.” | | ― W.H. Davies
niagara_guy
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Re: Switching from high expense ration funds to Vanguard funds

Post by niagara_guy »

I will never pay the kind of fees EJ and the others charge, it just reduces the amount of money I have (1% or more off the top adds up to a lot of money over the years). I personally use Vanguard, Fidelity and Schwab. Fido and Schwab have offices in major cities, that may be a plus for you since you can go there in person. I believe any of the 3 will gladly help you move your money over, just give them a call to get started (I might interview all 3 before picking one). They all want your business and will work hard to get it. Put your money in low cost (0.04% fee per year or lower) index funds to minimize the fees you pay. Vanguard offers PAS (Personal Advisor Services) that charge I think 0.3% per year if you need that but I would encourage you to not use PAS if you can do it yourself, it's not that complicated.

Thank you for using QCD to donate money to a charity ( I think it's a great deal).

You don't owe your EJ agent (aka sales guy) anything, this is a business decision you are making to save money. Be polite but firm:

“I will be leaving EJ. Thank you for being my investment agent for the past xx years. I wish you the best.”

I would do this via email and would not answer his calls after sending the email (he will try his best to keep you as a customer, his income depends on it).

Post here again if you need more help. Welcome to the forum with your first post!
niagara_guy
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Re: Switching from high expense ration funds to Vanguard funds

Post by niagara_guy »

For your taxable account, if you sell holdings for a profit you will owe capital gains taxes (either long or short term). You might be able to transfer those holdings 'in kind' (without selling) to your new brokerage. It's not an issue for retirement accounts.
pkcrafter
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Re: Switching from high expense ration funds to Vanguard funds

Post by pkcrafter »

Welcome Hummer,

I feel no confidence in trying to figure out how to take underperforming/high expense ratio EJ mutual funds from both my taxable and pre-tax accounts and move to Vanguard.

Good choices include Vanguard, Fidelity and Schwab. None, are perfect. Good news is you don't have to speak to EJ about the move, The receiving company initiates it, but you do have to make sure the receiving company carries all the funds or they won't get moved and you will end up with a mess. The only thing you will have to do is tell EJ to sell some or all the funds and put the money in cash. Find out from the new company if they carry the funds you have.

The only advantage to EJ is that there is a brick and mortar entity to visit.

Nope, even that isn't an advantage with EJ.

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
Topic Author
hummingbird47
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Re: Switching from high expense ration funds to Vanguard funds

Post by hummingbird47 »

Thank you for your thoughtful replies. I hadn't considered any funds but Vanguard's. I had actually thought about the four Vanguard funds listed in one of the replies. With 85% of my total portfolio being invested in individual stocks and only 15% in mutual funds, I haven't had many expenses because I choose the stocks and hold (almost) forever. I don't have many trades and my account is not actively managed. It's just that I keep reading that at 75 I should probably not be 85% in individual equities. I created my own little index by owning stocks in each sector at recommended percentages. I've been happy with returns. I've been comfortable with a high-risk tolerance since I wasn't withdrawing money to live on. I think I'm attracted to the simplicity of the index fund approach. Also, I think my risk tolerance has changed. Plus, I've been vigilant my whole life about saving and now think I might want to spend some of that money.
Topic Author
hummingbird47
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Re: Switching from high expense ration funds to Vanguard funds

Post by hummingbird47 »

Backpacker 61, I like your idea of using the same company my grandson is using, not only for his help but because he will be an heir, as my only grandchild. I actually think he invested with Vanguard after I sent him the Bogelhead investing guide but also opened a Fidelity account. I will check.
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Mr. Potter
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Re: Switching from high expense ration funds to Vanguard funds

Post by Mr. Potter »

I'd just like some simple steps to open Vanguard funds and transfer my EJ funds to them. I know my EJ agent will throw a fit but so be it. I live in a small rural town and know no one to talk to about Vanguard.
Since you live in a rural area there is little chance of having a Fidelity or Schwab (Vanguard does not have local offices) office nearby. No big deal, I have been investing for a long time and have never needed to stop by the brokerage office. Leaving Ed Jones might be a bit more difficult than you think, (emotionally not finacially) but remember this is your money not your advisors.
Just wanted to say welcome to the forum and congratulations on having the courage to DIY. You will be glad you did and this forum is the ultimate resource for those willing to learn.
GP813
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Re: Switching from high expense ration funds to Vanguard funds

Post by GP813 »

hummingbird47 wrote: Thu Jan 20, 2022 8:50 pm Thank you for your thoughtful replies. I hadn't considered any funds but Vanguard's. I had actually thought about the four Vanguard funds listed in one of the replies. With 85% of my total portfolio being invested in individual stocks and only 15% in mutual funds, I haven't had many expenses because I choose the stocks and hold (almost) forever. I don't have many trades and my account is not actively managed. It's just that I keep reading that at 75 I should probably not be 85% in individual equities. I created my own little index by owning stocks in each sector at recommended percentages. I've been happy with returns. I've been comfortable with a high-risk tolerance since I wasn't withdrawing money to live on. I think I'm attracted to the simplicity of the index fund approach. Also, I think my risk tolerance has changed. Plus, I've been vigilant my whole life about saving and now think I might want to spend some of that money.

I think following this template might get you better responses/ideas from the Bogleheads.

viewtopic.php?f=1&t=6212
DRC67
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Re: Switching from high expense ration funds to Vanguard funds

Post by DRC67 »

About a year ago I moved my two Edward Jones over to Vanguard. I contacted Vanguard and told them that I want to move my account. They took the ticker symbols and told me that they could be moved. The next day Vanguard contacted me and we started the process of moving my accounts, they help me set up the traditional IRA and a Roth IRA. The process took about two weeks, and cost me $95.00 per account to close out of Edward Jones accounts. When my Edward Jones advisor caught wind of it she called me and I told her it was because of the high fees that I am moving my accounts for lower fees. She quite upset and was telling me that it is not fair that I am moving my accounts.

The reason I went with Vanguard is because my 401K is with them and the lower costs. I have them manage my account through the Vanguard PAS and I am happy with them, no loaded funds, lower expense ratios and letting me keep more of my money to invest.
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Taylor Larimore
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Re: Switching from high expense ration funds to Vanguard funds

Post by Taylor Larimore »

hummingbird47 wrote: Thu Jan 20, 2022 12:06 pm This is my first post. I'm a 75-year-old retired teacher who's investment knowledge is self-taught. When I retired 16 years ago, I moved my 403b funds into an Edward Jones account because I didn't know better. Thankfully, it isn't a managed account. For more than a decade, I chose my stocks and have been happy with choices. About 5 years ago, as I hit 70, I wondered if I should reduce my 100% stock weight and EJ agent happily led me to mutual funds that EJ offers. Clearly, my self-knowledge was inadequate to evaluate that guidance. Now, after reading The Bogleheads' Guide to Investing, twice, many other investment books, subscribing to Kiplinger's Personal Finance, getting a daily feed from Motley Fools, etc. I'm not happy with the expense ratios on my "chosen" mutual funds. I am not tapping into my investments for living expenses and usually reinvest my RMD. This year I did give my RMD to a QCD rather than reinvest. Here's my main question: I feel no confidence in trying to figure out how to take underperforming/high expense ratio EJ mutual funds from both my taxable and pre-tax accounts and move to Vanguard. The only advantage to EJ is that there is a brick and mortar entity to visit.
I gave the Boglehead investing book to my 25-year-old grandson and he embraced the concept immediately, opened three Vanguard accounts and passed the book on to a friend. Unfortunately, he lives hundreds of miles away and has little time to help his grandmother do the same.

I'd just like some simple steps to open Vanguard funds and transfer my EJ funds to them. I know my EJ agent will throw a fit but so be it. I live in a small rural town and know no one to talk to about Vanguard. I will look on this site and see if there may be a Boglehead meeting somewhere within an hour's drive. Thank you for any help.
hummingbird 47:

Welcome to the Bogleheads forum! I am pleased that you and your grandson enjoyed your Boglehead book.

You have received good advice about moving away from high-cost Edward Jones. I suggest you take a look at the many benefits of this low-cost Three-Fund Portfolio.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "There may be better investment strategies than owning just three broad-based index funds but the number of strategies that are worse is infinite."
"Simplicity is the master key to financial success." -- Jack Bogle
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Wiggums
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Re: Switching from high expense ration funds to Vanguard funds

Post by Wiggums »

We hold the three fund portfolio at Vanguard and Fidelity. Both brokers will help you computer the Paperwork to move your funds from Edward Jones to the new broker. It’s best to have the new broker request the funds from Edward Jones because they have a vested interest in moving the money.
"I started with nothing and I still have most of it left."
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Re: Switching from high expense ration funds to Vanguard funds

Post by abuss368 »

hummingbird47 wrote: Thu Jan 20, 2022 12:06 pm This is my first post. I'm a 75-year-old retired teacher who's investment knowledge is self-taught. When I retired 16 years ago, I moved my 403b funds into an Edward Jones account because I didn't know better. Thankfully, it isn't a managed account. For more than a decade, I chose my stocks and have been happy with choices. About 5 years ago, as I hit 70, I wondered if I should reduce my 100% stock weight and EJ agent happily led me to mutual funds that EJ offers. Clearly, my self-knowledge was inadequate to evaluate that guidance. Now, after reading The Bogleheads' Guide to Investing, twice, many other investment books, subscribing to Kiplinger's Personal Finance, getting a daily feed from Motley Fools, etc. I'm not happy with the expense ratios on my "chosen" mutual funds. I am not tapping into my investments for living expenses and usually reinvest my RMD. This year I did give my RMD to a QCD rather than reinvest. Here's my main question: I feel no confidence in trying to figure out how to take underperforming/high expense ratio EJ mutual funds from both my taxable and pre-tax accounts and move to Vanguard. The only advantage to EJ is that there is a brick and mortar entity to visit.
I gave the Boglehead investing book to my 25-year-old grandson and he embraced the concept immediately, opened three Vanguard accounts and passed the book on to a friend. Unfortunately, he lives hundreds of miles away and has little time to help his grandmother do the same.

I'd just like some simple steps to open Vanguard funds and transfer my EJ funds to them. I know my EJ agent will throw a fit but so be it. I live in a small rural town and know no one to talk to about Vanguard. I will look on this site and see if there may be a Boglehead meeting somewhere within an hour's drive. Thank you for any help.
I am glad you benefited from the book and are on a better journey to financial prosperity and success. One Dollar less in expenses is one Dollar more that stays invested for you.

When my kids graduate college I intend to buy them a book as well.

As parents we can help the next generation.

Best.
Tony
John C. Bogle: “Simplicity is the master key to financial success."
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