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Transferring accounts from Edward Jones to Vanguard

I’ve been reading some of the forum threads over the past few weeks, but this is my first time posting.

I am in my late twenties and have had an investment account at Edward Jones for roughly the past five years. I recently got married, and my wife and I are planning to invest some money from our wedding in an existing Vanguard account that she has. We’re planning to set that money aside for the down payment toward a house in a few years. That, along with a Frontline special from a few months ago, got me thinking about moving my accounts to Vanguard. I have a very limited knowledge about investing, and even less about the process of transferring my accounts, but it sounds like Vanguard has lower fees and better results for investors than Edward Jones. I had a good relationship with and liked my financial adviser at the local office, but he recently left, so now seems like as good a time as any to move to Vanguard.

My concern about transferring is mostly to do with logistics: fees, taxes and so on with moving, and whether to liquidate my funds at Edward Jones beforehand or to transfer in-kind. I’ve also read that I should find out the “basis” of my taxable accounts with EJ before moving, but I’m not totally sure what that means or how to get that information. Ideally, I’d like to begin the transfer process with Vanguard and only have to deal with EJ minimally, if at all.

Emergency funds: Roughly 3-6 months of living expenses in savings Debt: Student loans Tax Filing Status: Married, but we haven’t filed taxes since so I’m not sure yet whether we’ll file jointly or separately State of Residence: Massachusetts (possibly moving to Connecticut or New Hampshire in a few years) Age: late 20’s

I have two accounts at Edward Jones, a Roth IRA and a “Single” account, which I believe is a taxable account for general investing. I have under $20k invested in total, with roughly 85% of that in the Roth IRA account.

Roth IRA at Edward Jones 23% Income Fund of America (AMECX) (.58% expense ratio) 25% AT&T (T) stock 9% Coca-Cola (KO) stock 15% Northeast Utilities (NU) stock 8% Realty Income Corp (O) stock 18% Total SA ADR (TOT) stock 2% cash

Monthly Contributions $200 to Roth IRA

“Single” (taxable account) at Edward Jones 55% National Grid (NGG) stock 45% Energy Transfer Partners (ETP) limited partnership

Questions: 1. Does anyone know what sort of fees Edward Jones charges for closing an account? My understanding is that I have two separate accounts, so I’m assuming any closing fees will apply to both of them.

  1. Right now, I’m planning to transfer the accounts in-kind to Vanguard, because I imagine that will be easier and won’t incur any tax penalties at the time, but would it make more sense to liquidate the accounts and transfer the money to Vanguard? Ideally, I’d like to choose one of Vanguard’s index funds for the Roth IRA.

  2. I initially opened the “Single” taxable account at the suggestion of my financial adviser at Edward Jones, with the understanding that the interest in my savings account wasn’t keeping up with inflation. In addition to the Roth IRA, I’d like to keep some money in an account that I can access as needed for more short-term goals. Would that be best invested in a separate index fund or somewhere else at Vanguard?

  3. My wife’s 401k is not at Vanguard, so we won’t be putting our separate funds into a single account there, but I’m wondering whether I should open a totally new account for my Roth IRA and short-term investments, or somehow transfer my Edward Jones account to the Vanguard account that we already have for a future down payment on a house. That account is currently in her name only, so I’m assuming I’ll just create a separate account for my retirement and short-term investments.

Thanks!

  1. Right now, I’m planning to transfer the accounts in-kind to Vanguard, because I imagine that will be easier and won’t incur any tax penalties at the time, but would it make more sense to liquidate the accounts and transfer the money to Vanguard? Ideally, I’d like to choose one of Vanguard’s index funds for the Roth IRA.

  2. I initially opened the “Single” taxable account at the suggestion of my financial adviser at Edward Jones, with the understanding that the interest in my savings account wasn’t keeping up with inflation. In addition to the Roth IRA, I’d like to keep some money in an account that I can access as needed for more short-term goals. Would that be best invested in a separate index fund or somewhere else at Vanguard?

  1. I would attempt a “transfer in kind” of your assets in the taxable account. What happens in the IRA won’t matter, but if you liquidate the taxable account, you will pay taxes on gains. If you want to transfer those taxable assets to another fund, you will still have to pay taxes. As I said, in the IRA it doesn’t matter from a tax standpoint. I did a “TIK” from my IRA and then did a fund exchange into Vanguard’s funds.

  2. It’d be easier to help if you’d explain what the short-term goals are (at least what you define as “short term”). In general, if you’re going to use that money in the next several years, a short-term bond fund or (better) a CD or money-market might be the best answer. When it’s money you need soon, reducing risk should always trump chasing returns. Vanguard has funds that would work for those goals, but your bank might be the best option depending on your goals.

Personally, I’ve never seen a need to keep accounts at multiple investment companies. I have a small USAA mutual fund account that I don’t want to liquidate (taxes), but otherwise all else is at Vanguard. Others disagree with this and hold accounts at several firms.

  1. My wife’s 401k is not at Vanguard, so we won’t be putting our separate funds into a single account there, but I’m wondering whether I should open a totally new account for my Roth IRA and short-term investments, or somehow transfer my Edward Jones account to the Vanguard account that we already have for a future down payment on a house. That account is currently in her name only, so I’m assuming I’ll just create a separate account for my retirement and short-term investments.
  1. I opened an account in my name only, then switched it to joint with her married name, then did a name change form for my wife (you need an official copy of your marriage license) to get her name correct on her IRA. Kind of a pain in the backside, but now when either one of us logs into Vanguard, we see all three accounts - his/hers IRAs and taxable brokerage. If you guys are going to put all your money in one pile (which we did and I strongly recommend), make sure both of your names are on all of the accounts. It makes things easier if the worst happens, and it also makes them easier to transfer/deal with in the future.

$0.02

If I remember correctly, the fee for closing an EJ account is somewhere around $90-100.

As shown in this Edward Jones Schedule of Fees for IRAs, it will currently cost you $95 to close out your IRA account. And of course, “all fees are subject to change without notice.”

FrankLloydMike wrote: I have two accounts at Edward Jones, a Roth IRA and a “Single” account, which I believe is a taxable account for general investing. I have under $20k invested in total, with roughly 85% of that in the Roth IRA account. ____ 1. Does anyone know what sort of fees Edward Jones charges for closing an account? My understanding is that I have two separate accounts, so I’m assuming any closing fees will apply to both of them.

It’s around $100.

  1. Right now, I’m planning to transfer the accounts in-kind to Vanguard, because I imagine that will be easier and won’t incur any tax penalties at the time, but would it make more sense to liquidate the accounts and transfer the money to Vanguard? Ideally, I’d like to choose one of Vanguard’s index funds for the Roth IRA.

With that amount (~$20K) it makes more sense to liquidate and move cash in both the Roth IRA ($17K) and taxable ($3K).

  1. I initially opened the “Single” taxable account at the suggestion of my financial adviser at Edward Jones, with the understanding that the interest in my savings account wasn’t keeping up with inflation. In addition to the Roth IRA, I’d like to keep some money in an account that I can access as needed for more short-term goals. Would that be best invested in a separate index fund or somewhere else at Vanguard?

Money for short-term needs (house down-payment, new car, fancy vacation, etc.) should be in a mix of savings accounts, CDs, money market accounts, I savings bonds through Treasury Direct, and possibly a short term bond fund like (VBISX) Vanguard Short-Term Bond Index Fund Investor Shares (0.20%). Not stocks.

  1. My wife’s 401k is not at Vanguard, so we won’t be putting our separate funds into a single account there, but I’m wondering whether I should open a totally new account for my Roth IRA and short-term investments, or somehow transfer my Edward Jones account to the Vanguard account that we already have for a future down payment on a house. That account is currently in her name only, so I’m assuming I’ll just create a separate account for my retirement and short-term investments.

For the Roth IRA at EJ, liquidate it and have Vanguard pull the money over to a new Roth IRA at Vanguard. For the taxable at EJ, liquidate it and put it in either your wife’s short-term account or one of the choices in #3 above. (Make sure you have all the cost-basis records for the taxable account before you leave EJ.)

Thanks for all the responses–it’s been really helpful in figuring out how to go about the transfer process.

It sounds like it will be $95 each to close the two accounts at Edward Jones, so $190 total. Not too bad of a hit to move to Vanguard, given all the advantages.

Thanks also for the differing viewpoints on whether to liquidate the accounts or transfer them in-kind. I was assuming that, given the size of the accounts, the tax hit wouldn’t be too bad to liquidate.

To be honest, I can’t remember exactly what the taxable account was for. I’ve thought of it as more a short-term asset, but without anything in mind, and it may have been recommended more as a tool to generate additional income to invest–I can’t recall. In any case, it sounds like for short-term use it would be better to put it in a mix of savings, CDs and short term bond funds, or in the same account as the one for the down payment.

For the Roth IRA at EJ, liquidate it and have Vanguard pull the money over to a new Roth IRA at Vanguard. For the taxable at EJ, liquidate it and put it in either your wife’s short-term account or one of the choices in #3 above. (Make sure you have all the cost-basis records for the taxable account before you leave EJ.)

Would you recommend asking Edward Jones directly for the cost-basis records of the taxable account? I’ve done a bit of research into calculating the cost-basis and it sounds fairly complicated–I’d prefer not to tip EJ off that I’m planning to transfer my accounts, but if they can just provide me with the cost-basis records, it sounds like it would save me a headache. And just to be clear, I only need those for the taxable account, not the stocks or other investments in the Roth IRA?

Thanks again.

FrankLloydMike wrote: To be honest, I can’t remember exactly what the taxable account was for. I’ve thought of it as more a short-term asset, but without anything in mind, and it may have been recommended more as a tool to generate additional income to invest–I can’t recall. In any case, it sounds like for short-term use it would be better to put it in a mix of savings, CDs and short term bond funds, or in the same account as the one for the down payment.

Would you recommend asking Edward Jones directly for the cost-basis records of the taxable account? I’ve done a bit of research into calculating the cost-basis and it sounds fairly complicated–I’d prefer not to tip EJ off that I’m planning to transfer my accounts, but if they can just provide me with the cost-basis records, it sounds like it would save me a headache. And just to be clear, I only need those for the taxable account, not the stocks or other investments in the Roth IRA?

If someone told you to invest to generate more income to invest at your age, I think they’re looking out for something they need to sell, rather than looking out for you. That doesn’t make any sense to me.

I’m not sure I would care if EJ knows you’re leaving or not. They’re going to charge you one way or another, and they can’t stop you or freeze your assets or anything like that. Of course, they will try to talk you out of it, but you’re smart to be changing, so don’t look back.

It’s never a bad idea to have your cost-basis records, but you don’t need them for the IRA since you’re not making a taxable withdrawal.

Welcome to the forum.

A few observations:

1) No one should hold individual stocks. There is too much risk.

2) For your level of assets (or any level), I would consider either a simple low cost Target Retirement or Life Strategy funds from Vanugard.

3) Make sure you maximize your IRA space. This is valuable and is a use it or lose it each year. $5,500 per individual.

4) Taxable account could easily be the “Three Fund Portfolio”. that is Total Stock Index, Total International Index, and Intermediate Term Tax Exempt Bonds.

5) If you do not want a Target Retirement or Life Strategy fund as noted above, consider the “Three Fund Portfolio”. The equity funds stay the same and you simply substitute Intermediate Term Tax Exempt for Total Bond Index.

6) Move the assets to Vanguard. No one has lower fees, which means over time, you keep more of your money growing for you.

FrankLloydMike wrote: Would you recommend asking Edward Jones directly for the cost-basis records of the taxable account? I’ve done a bit of research into calculating the cost-basis and it sounds fairly complicated–I’d prefer not to tip EJ off that I’m planning to transfer my accounts, but if they can just provide me with the cost-basis records, it sounds like it would save me a headache.

You may already have the records. They would be your confirmations and monthly, quarterly, yearly statements. You do save that stuff, right? If you can’t find them (on paper or online) then you’ll have to get them from EJ.

And just to be clear, I only need those for the taxable account, not the stocks or other investments in the Roth IRA?

Yes, just taxable.

Thanks again for all the feedback–it has been enormously helpful. I’ve started the process online to switch to Vanguard, but I’m trying to get the last of the information I need. I’m trying to figure out if I can transfer both my EJ accounts to Vanguard at once or if I need to do the process twice, but I think that’s something that I’ll call Vanguard about.

Duckie wrote: You may already have the records. They would be your confirmations and monthly, quarterly, yearly statements. You do save that stuff, right? If you can’t find them (on paper or online) then you’ll have to get them from EJ.

I do keep those records, and was able to locate the cost-basis for the stocks. Unfortunately, it sounds like I have to get a K-1 from the limited partnership for the cost-basis of those funds. I’m going to try to get those before I switch, but otherwise I believe the form will come early next year for tax filings, and in either case it’s not a huge amount of money.

abuss368 wrote: Welcome to the forum.

A few observations:

1) No one should hold individual stocks. There is too much risk.

2) For your level of assets (or any level), I would consider either a simple low cost Target Retirement or Life Strategy funds from Vanugard.

3) Make sure you maximize your IRA space. This is valuable and is a use it or lose it each year. $5,500 per individual.

4) Taxable account could easily be the “Three Fund Portfolio”. that is Total Stock Index, Total International Index, and Intermediate Term Tax Exempt Bonds.

5) If you do not want a Target Retirement or Life Strategy fund as noted above, consider the “Three Fund Portfolio”. The equity funds stay the same and you simply substitute Intermediate Term Tax Exempt for Total Bond Index.

6) Move the assets to Vanguard. No one has lower fees, which means over time, you keep more of your money growing for you.

Thanks for the advice on funds–I need to look into which funds to choose, but my intention is to transfer my existing Roth IRA into a Vanguard fund once/while I move it from Edward Jones. Maximizing the IRA is a good point as well–while I can’t contribute the maximum annual amount at the moment, I could probably increase my monthly contribution comfortably.

nash031 wrote:

FrankLloydMike wrote: If someone told you to invest to generate more income to invest at your age, I think they’re looking out for something they need to sell, rather than looking out for you. That doesn’t make any sense to me.

I’m not sure I would care if EJ knows you’re leaving or not. They’re going to charge you one way or another, and they can’t stop you or freeze your assets or anything like that. Of course, they will try to talk you out of it, but you’re smart to be changing, so don’t look back.

I had wondered about the motive behind them recommending that additional account as well–all the more reason to make the move. I don’t really care if they know I’m leaving–I just don’t want to have to deal with a sales pitch or any uncooperativeness on my way out the door.