I Broke Up With My Financial Planner

*This post may contain affiliate links, please see my disclosure

Broken HeartI mentioned a few months back that I finally dumped Edward Jones after 9 years of investing with them and brought my Roth IRA over to Vanguard. I’ve had a few people email me and ask about the reasoning behind this, as well as the process, so I figure I’d write it out in a blog post in case others were interested as well.

Now let me just say this before I get into the post; I don’t hate Edward Jones. I don’t hate financial planners in general either. I just want to encourage those who may be too scared to even THINK about managing their own investments to take some numbers into consideration, as well as pick up a copy of the book, “Millionaire Teacher” (either through the library, or using my affiliate link here). That book can explain MUCH better than I the impact of paying outrageous fees on your investments, no matter the type of account.

So, without further ado, my sad tale of heartbreak, learning, and redemption.

A Beautiful Beginning….Or So I Thought

Our relationship started as normal as any. I would drive by and see you out my car window, your bold white letters hanging over a professional-looking exterior of a building, reciprocating my glance in your reflection of darkened windows. Images of 10% returns and tax deferred savings danced in my head, as I finally drummed up the courage to introduce myself. Well, actually, my mom used to work there, and I had just inherited a ton of cash, and she thought it wise to stash some of it away before I wasted all of it. Good call mom.

Our relationship was cordial, as you walked me through the portfolio options and asked what my goals were. I could tell something was off, but again, everything seemed so professional, why would I need to worry. Things moved quickly from there. I remember signing some papers, and then some more papers, and then getting a stack of papers to bring home and NOT read because they were drier than reading a dictionary’s appendix. I was signed, sealed and sold on the thought of my money being well taken care of and growing without worry. I mean, I had a professional on my side, my money was safe.

Things Got Rocky

In 2008, I started getting more and more letters of concern from you, but they were mostly incomprehensible and always ended with reassurance. As did all the invoices for my yearly Roth IRA “management fees” that were usually taken out of the Roth directly. Oh well. As the portfolio started declining, I continued to get more and more letters indicating that though things looked bad on the outside, we would prevail. Our relationship was distant, but we could stick it out.

Luckily, I stayed and my portfolio returned and then some. The letters of concern disappeared and things were back to normal….if by normal you mean no communication, and only the occasional invoice and call to update my address. Sure, our relationship had grown stale, but it was probably because I lowered my contributions and prioritized my home and growing family. I waited for your call to connect, maybe review the portfolio and talk about updated goals and risk tolerance, but it never came. You stayed steady collecting your $40, and I stayed ignorant of what was really going on.

My Shocking Discovery

Something strange happened. As I started getting a better handle on my finances, I started seeing people I respected and looked up to mention things called “index funds” and preach the hatred of “high-fee mutual funds, especially those front-loaded ones.” I didn’t feel the connection at the time, because there was no way you would have mismanaged my money and collected such a large sum up front for no reason. We had a spark, and shared interest, and that was to grow my portfolio with minimal interruptions.

But the pivotal moment happened when I sent a friend my portfolio information to review and ask what he would do in my shoes. He took a look, and with a sorrowful look in his eyes, told me what I never wanted to hear.

“Hey buddy. I know you’ve been through a lot, and you have 9 years of history here. But your Roth IRA is invested in front-loaded mutual funds at 5.75% and an annual fee of 2%.”


My Broken Heart Lead To A Few Learned Lessons

How could this have happened right under my nose? From the beginning is was doomed, I was being gouged and didn’t have a clue. Then I remembered back to that that uneasy feeling I had just before signing the papers. Did I even read the details of what was happening to my money? I put in $10,000 in 2 years and $575 of that was swept away immediately. How could I not have seen the evidence?!

What hurt more was not the initial lie, but the fact that I was being charged year after year after year an exorbitant fee and our relationship kept humming along like it was nothing. NOTHING! That is the word that perfectly described our relationship, and it’s also what I was going to be left with after paying such high fees for my money to sit in mediocre funds that did NOT outperform any of the Vanguard Stock Market Index Funds. So I decided to take some action and learn how to end this relationship and get my portfolio back!

I read through a few sites, and the book, Millionaire Teacher, and realized how bad things really were. I learned a few things:

  1. Commission-based financial planners are trying to survive in an industry that looks after the interests of the planner first, not the investor.
  2. Over 80% of managed mutual funds are regularly beaten by low-cost, passively managed index funds
  3. Not only do index funds beat the managed funds, but their low fees can save you TENS OF THOUSANDS or more over the lifetime of your portfolio. (See the snapshot from the Bogleheads Wiki page.)
  4. It is not scary to managed my own portfolio, but I was going to be cautious, because I knew how much it hurt to be burned.

Bogleheads Mutual Fund Fees

The Breakup

Armed with my lessons learned, the knowledge of how much I would be saving in the coming decades, and a disgust for all things front-loaded (I’m looking at you, washing machines), I decided to do the dignified thing and make a phone call to break up.

Surprisingly, the call went much smoother than I thought. That’s probably because I called Vanguard instead of calling Edward Jones and breaking up directly. Because hey, why not enlist the help of the world’s largest “no-load” mutual fund company. BOOYAH!

I was able to give them the details of my current Roth IRA, create an account with them, setup the full transfer out of Edward Jones, and pick a Target Date Index Fund to start my self-managed venture. This new relationship was already starting to feel like home, and provided me everything short of fresh baked brownies as a welcome gift (though the no-load, 0.18% expense ratio fund tastes better than any brownie). They took care of the details, and I was able to breathe a sigh of relief, knowing that my portfolio was no longer going to be poked and prodded, leaking fee money all over the place.

But Edward Jones did let the door hit me on the way out. I was slapped with a $95 cancellation fee, $40 annual fee, and some other junk for good measure to ensure that I would NEVER come knocking at their door again. Fair enough, I thought, as I failed to read the T&C in the beginning, I guess I signed up for this painful exit.

It was finally over.

My New Life Without A Financial Planner

It’s kind of scary, but surprisingly freeing. I feel like I have so many options, and there are plenty of funds in the sea to choose from. My money is still parked in a target date fund, I’m still cautious and haven’t jumped out completely on my own. Knowing that my trusty target date fund is still going to beat 80% of the managed funds out there warms my heart, and the itty bitty expense ratio helps me sleep at night.

My confidence is back, and with Vanguard by my side, I feel the world is mine for the taking. Or….at least tax free returns.

Disclaimer: I’m not a financial planner or professional blah blah blah. This is for entertainment purposes only, and any decision made off information obtained here is probably awesome, but you should consult a professional……………..

photo credit: Sister72 via photopin cc

Jacob Wade

Jacob Wade

Jacob Wade has been a nationally-recognized personal finance expert for the past decade. He has written professionally for The Balance, The Spruce, LendingTree, Investing Answers, and other widely-followed sites. 
He’s also been a featured expert on CBS News, MSN Money, Forbes, Nasdaq, Yahoo! Finance, Go Banking Rates, and AOL Finance.

In 2018, Jacob quit his job and his family decided to sell everything (including their home) to take off on an adventure. They traveled the country in an RV for nearly 3 years, visiting over 38 states, 20+ national parks and eventually settling in the sunshine state!

38 thoughts on “I Broke Up With My Financial Planner”

  1. Ouch! Definitely a lesson learned the hard way, but good thing you’re on the straight and narrow now. Thankfully, I learned about Vanguard before I ever invested a penny, and started with them right off the bat. I don’t really manage my money either — it’s sitting in index and target date funds, and I’m perfectly happy to let it ride there for another 20 years.

  2. Hm. You actually sort of described how I felt when I moved my Roth IRA from a bank’s money market account to State Farm mutual funds. I was getting nil in interest at the bank for years (and I mean over 10 years on four digits of investment, and when I say nil, I mean $0.20/month). That was misguided, and they suckered my teenage self into it; I didn’t realize anything was wrong because I was starting so early and they said things would be perfect because I was so young. Well, I woke up this year and decided that was the error of my youth.

    I met with my State Farm agent because I already had car insurance through them, and he mentioned their mutual funds and their returns which were SO much better than nil. We met a few times, and my boyfriend knew this man for years and trusted him completely, so over the course of multiple meetings, I finally decided to go against my gut (to go with Vanguard – “There is a catch in the fine print for it to be so cheap; you’ll regret it via hidden fees.” -both my boyfriend and the agent), and transferred my Roth IRA over to SF. Looking back, we had those multiple meetings because I didn’t quite feel 100% fuzzy wuzzy with the whole thing; it had to be re-explained to me more than once because it seemed to not make sense. It seemed off. But my boyfriend said, “trust him!” and the agent said, “We beat all other funds, even Vanguard, after 10 and 20 years, here look at this Barron’s List” and I hesitatingly signed all the papers because they were higher on the list at #2 or something.

    I don’t feel completely awesome about the move and it’s been about 6 months. After reading this post, I think I might know why. There is a 5% “Maximum Initial Sales Charge”, the Gross Expense Ratio is 1.76% and the Net Expense Ratio is 1.25%. Is that bad? I think it’s bad.

  3. It’s amazing how many people are jut like you. Even my MIL, who was the one that told us to go with vanguard when we were opening our Roth IRAs in college still has money with a manager at one of the big brokerages. She feels loyalty and is having a hard time getting past that even though the last time she took money out he did it in a way that charged her the highest fees possible. But still… The money is there. Maybe someday.

    • It’s the bug in their ear (AKA Financial Sales Person) pandering fear of having and unmanaged account. Quite shady, really. Hopefully your MIL sees the light and gets her money out of the clutches of those fees suckers 🙁

  4. This is very good information. I have had a suspicion for some time about our IRA. With this information, I was able to find out the problem. The company we use, Primerica, has started charging upwards of a 5.70% sales charge to convert from B to A shares in a fund we have. Highway robbery! We have been with them since 2003, but since 2011 they have started converting these shares and charging a fee to do so. Part of me wants to question what was the reasoning behind this, but part of me just wants to move on. I have been planning to switch to Vanguard, but this is the confirmation that I needed. Thanks for posting your decision. It has been very helpful to me.

    • Ugh. If they are moving shares and getting a front-loaded sales charge for each move, leave them. I’m sure it’s “part of their management strategy to align your portfolio with your goals” or some crap, but you said it best, it’s “highway robbery”.

  5. We had a similar experience when we first started out with our retirement savings. We had a financial planner who we thought had our best interest at heart… NOT! We had the same thing, front-loaded mutual funds with high fees until we finally broke up with him and switched it all to a discount brokerage where we now manage it all by ourselves thank you very much! Feels much better knowing that we are paying low fees and doing a much better job managing our money!

    • Good for you! For some reason, it’s really, really tough to make the break, but reading that book and reading a few articles in Bogleheads showed my the light and gave me the confidence needed to make the leap. So glad I did.

  6. My experience with Vanguard was very poor. I am a Fidelity/TIAA-Cref investor but thought it would be a good idea to move my son’s Roth IRA from the bank to Vanguard because they have great, low cost, no-brainer Retirement Target funds.
    Short story, they took over six months to get the funds moved- only getting something done after repeated probing. Then, to add insult to injury, they shut down my Internet access to my son’s account (he has no interest in monitoring things but I do). Heck, I had more flexibility at the bank (with higher fees).
    I’m sorry I ever called Vanguard. No service. Big hassle.

  7. EJ people are not financial planners, they are salesmen. At the end of the day, they are probably better to have than going it alone. Would I ever advise or send anyone to EJ? Heck no!

    As in all industries, they are good ones and bad ones. In this industry, the bad ones vastly outweigh the good ones. The reason is the huge conflicts of interest involved and the lack of true fiduciary standard mandated by law to a VERY large area of the market (see EJ, all the wirehouses, etc).

    For new people in the financial advice industry the easiest way to make a living and survive is to SELL whatever makes most sense for THEM. Doing it the right way (as in going fee only which means NO compensation is ever earned other than FULLY disclosed transparent fees paid DIRECTLY by the client) is not easy and takes time. But we are out there. And we do like Vanguard… A LOT!

    Oh, thanks for the backlink. In my spare time I like show how to travel for free to my family and friends 🙂

    • I don’t think fiduciary standards are lacking as much as people don’t know the right questions to ask of the person they’re hiring. If I work for EJ, I’m not going to tell you that you didn’t go to a financial planner….I’m going to accept your business.

      • And that’s the tough part right there….any ignorant kid with some savings can walk in and the “broker” at EJ will happily take care of them. So I guess it’s financial education on the part of the kid, and clarity on the part of the financial institution that would help greatly.

  8. Jon and I also ‘broke up’ with EJ a few months ago and put the funds into his Roth. We actually were sent paperwork ‘proving’ that the funds we were invested in would do better than the mutual funds we were moving them to, but Jon did the math on his own and ran it by an accounting friend and we found out they had done incorrect math! That seemed unethical let alone sneaky. We’re happy to be done there.

  9. Good lesson, even though I don’t have any desire to open up any kind of managed brokerage account it’s good to be reminded that even if my self-managed account isn’t performing awesome, it’s probably better than it would be otherwise!

  10. Good info on paying attention to what you’re buying before buying. But I must add that there are those 20% if funds that beat the market and index funds despite the upfront sales charges and the higher expense ratios. Personally I have a direct to fund account with American Funds. Annual charge is $10 and running hypothetical reports has shown I have beat comparable funds from vanguard especially during the last bear market.

    • I think it’s a fun idea to play with a small percentage of your portfolio (say 10%) and put them in things that may outperform for a small time. But studies have shown over and over again that indexing is the strongest play for long-term growth. I have definitely heard good things about American Funds, though, if you really know what you’re doing.

  11. I recently moved my old IRA to my Vanguard SEP IRA. Greg has an old account with Edward Jones that we’re also moving into his Sep IRA. It’s a pain to get the process moving but well worth it, I think.

  12. I bet that if you contacted Edward Jones it would have been easy as well. They didn’t give a crap about you. They did the absolute minimum to keep you there and it worked for 9 years. Kudos for moving on and getting involved with a firm that has low cost investments.

  13. So this is funny to me because this article comes at a time when I am considering- and meeting with this Friday- the financial planners over at Personal Capital. Admittedly, their fee of 1% is modest and they don’t invest people in fee-based funds. Anyway, I am curious how their proposal stacks up. Glad you found your confidence again.

  14. I had a similar experience last year. Since college I had my ROTH IRA and a mutual fund set up with INVESCO through my credit union (they had an advisor on the staff). Both were front loads of 5.5% and the annual fees were maybe 1.5%. After about 10 years I did the math on how much I just signed away in fees and thought life had to be better than this. I’m now diversified in a number of funds through USAA and moved that Roth over. I left the mutual fund in place with INVESCO but stopped adding to it years ago. It has done very well the last couple years (14%), but then I remind myself how much I’d sacrifice by adding to it. I’m doing the research to have it moved as painlessly as possible soon. Looking back, it really bothers me how a financial advisor working at a credit union would push high-fee funds on a 19 year old.

  15. I just saw this article and totally disagree with one point. As a guy who worked in the industry I never thought of Edward Jones as a home for “financial planners.” They’ve historically been commission based traders and brokers…..NOT planners. Planners will begin with a goal and then work through a plan which leads to a strategy including all aspects of your financial life.

    You bought investment products from an investment salesperson and they did poorly. You didn’t visit a financial planner or even have an experience remotely close to what most good planners would advocate.

    • Thanks for the clarification Joe. She always referred to herself as my planner, but obviously never followed through on what a true planner SHOULD have done. I think I was a young kid who she could plop some money into a fund that paid her for it to be “worth her time”, vs. someone who was mid-career and needing in depth planning.

      I am still shocked at the 6% loaded fund with 2% commission though. Ugh.

  16. Mostly, all Financial planner do keep track of portfolio of their client. But the most important factor they miss to do that they don’t review it with their client. Review of Portfolio helps a Financial Planner to actually understand the Changes in Risk Appetite, Risk tolerance level, changes in investment policy, etc. Due to which the portfolio return decline and the relationship of client and a Financial planner do come to end

    Financial Planner should always have a proper review on their behold client in order to get future business

  17. Glad you made a good move and learned a bit, definitely a hard lesson to have learned over that many years. Especially with such good growth years we’ve had recently.

    I will say, I’m personally not a fan of those target date funds. It might be ok for now, but you might want to take a more active approach to your money than just plopping it in one of them and saying you’re ‘managing your own money’. I’m not convinced they are better than going with something simply like a no-load S&P index fund. If they had existed for previous generations, they would have had people who were near retirement sitting primarily in bonds for the last 5-8 years, which would have been the last place I’d have wanted to be. Just my two cents, might be worth revisiting and investigating a bit more on their internal management fees and investment philosophy when you have time.

  18. oh yeah, and nearly forgot to mention, since I do use Edward Jones as well. It seems like your specific advisor was at fault, because mine has my ROTH IRA fee $20/year come out of my personal checking account each year so that it doesn’t impede my ability to stuff as much money into the tax preferred growth machine as possible. If anyone else uses them and their advisor hasn’t done that for you, call them up today and get that changed. I agree that it’s a bad practice for them to do that by default.

  19. Pingback: Roth Ira How Does Ej Get Paid | Getting Ready for Retirement
  20. Primerica isnt in the financial industry, theyre in the MLM pyramid industry. That is the only thing they excel at! Google is your friend!


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