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  • Parents asking for retirment account advice

    My parents recently decided to complain to me about how their retirement savings don't seem to be appreciating very much these days.  I asked them if they wanted me to take a look and to my surprise they said yes.  It turns out for over the last 15 years they have been using Edward Jones after they changed jobs and wanted to consolidate their 401k's, etc.

    I started looking through all of the funds they are in and found that nearly all of them came with  a 5.75% load except for the bond funds which were 2.25%.  The funds themselves also had a wide range of expense ratios but mostly .5% to 1%. They have also been placed in annuities with something like 1.5% to 2.5% expense ratios. The lack of short term performance in their account seems to be more related to the actual stock market than then fees from Edward Jones but I can only imagine it has cost them a significant amount of money over the longer term.

    After reading the plan documents I think my parents are stuck with the annuities for the long term, luckily it is only 25% of the portfolio...if that is luck anyway.

    They have about 800k in the retirement fund.  My dad will have both a private pension and a small gov't pension of which I cannot even guess what the amounts will be.  My mother will have an additional pension.  They don't spend much money...like ever.  Their goal (which I found interesting that they had one) is to spend 30K per year in retirement.

    Neither of my parents really want to make their own investment selections or have to "deal" with the complexity of the issue.

    I don't want to be their financial advisor as it would be too much stress so I'm looking to find a good financial advisor option for them.  I perused the site here and started down the path of looking at weathshape but the fees didn't seem to be as cheap as the 0.35% described on the page for advisors here.

    Does anyone have any suggestions?

  • #2
    You might try vanguard personal advisor service. The funds are vanguard and the aum fee is 0.3.  If they don't want to manage it and neither do you this would seem like a good choice.  Vanguard might can help with the annuities too.

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    • #3




      After reading the plan documents I think my parents are stuck with the annuities for the long term, luckily it is only 25% of the portfolio…if that is luck anyway.
      Click to expand...


      Why do you say they are stuck with the annuities? Once the penalty period has expired, they can either cash out (probably a bad idea) or do a section 1035 exchange into a low-cost annuity at Jefferson National's Monument Advisor or Low Load Insurance Services. Of course, if the so-called "advisor" has rolled them into new annuities to start the clock again, it might be awhile.

      I have very little regard for Edward Jones.
      Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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      • #4
        I guess the good news is using the 4% rule on the 800K your parents would pull about 32K yearly out of retirement savings.  Add to that their pensions and they should be in very good shape to meet their goals.

         

        Edward D Jones is a bunch of leeches, no question about it and unfortunately a lot of the damage has already been done with the front-end loads and annuities.  I have no idea how to manage the annuities but using a Vanguard advisor sounds like a reasonable idea.

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        • #5
          What about something like Betterment or Wealthfront? Fees are pretty low and all you need to do is give it some idea of risk tolerance. Vanguard seems like a good option too if they want a real person to go over things with. With any of these the fees would be much less for sure. Either way if their expenses are that low they should be in fine shape.

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          • #6
            My dad recently did a financial plan with Vanguard. He was very happy with their analysis. He was especially happy that they said his current plan (which I design and maintain) needed no changes. So they decided to save the 0.3% a year and stick with me. Not a big deal. I literally spend a single hour a year on maintaining it. One RMD, one rebalancing, and a little time reminding them why their plan is what it is.

            Don't expect physician specific financial planning or for them to recommend non Vanguard funds. But if your parents don't need those issues, I think they're going to be way better off there than with Edward Jones. And it relieves you of the stress of being in charge.
            Helping those who wear the white coat get a fair shake on Wall Street since 2011

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            • #7
              A couple of days ago I gave them a call and recommended that they switch to Vanguard.  I'm not sure how the annuities will shake out because the advisor just put them in 2 years ago.  They may just move everything else and leave the annuities where they are.  I think I've convinced them that losing so much to fees is a bad idea when considering a more conservative portfolio for retirement.  My parents also gave me an idea on their pensions/ss income.  They'll be getting somewhere close to 4k a month without dipping into the retirement fund.  I think they are set up well for what they want to do if they can just get to a lower fee provider.  It makes it a lot easier that they don't owe anything to anyone.

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