I’m Ditching My Edward Jones Deferred-Loaded, “B” Shares ROTH IRA

So after writing about how my Edward Jones ROTH IRA was invested in “B shares” of NFPBX and no response back from my Edward Jones rep questioning him if I could get out without paying the 5% deferred load or reallocate the funds elsewhere, I figured it was time to do something about it, and I have. As of yesterday at 9am, I turned off the faucet to funding that account. We’ll see if he calls me back now. 🙂

Either way I wasn’t very happy with the service he was giving me. He’s a nice guy, but it just seems to me like he is selling me a product instead of investing my money, very similar to my Universal Life Insurance policy I was sold on 5 years ago (of which I have also turned off the faucet, more on that later). But an advisor should be someone that is there to ADVISE you of where your money should go to help for YOUR retirement, not theirs. I am confident enough now to select my own funds and choose my own investing path, but it is nice to have someone to ping questions off if I DO have questions and for second opinions.

The personal finance blog network is one resource, but I like to have the option to ask a question to a certified financial planner if I can as well. It’s advantageous to have as many resources in your investing bullpen to help along the way with any decisions. So I will keep the Edward Jones account open for nothing more than to utilize the resource he’s given me; I won’t close the account because he’s not the one holding the bag for the 5% deferred “ladder approach” to investing, it is the actual fund, NFPBX. The ladder approach the Edward Jones rep refers to is that the 5% deferred load on the fund will decrease each year I stay in it, up until the 5th year, at which time my account will be converted into “A” shares and the load will be gone.

His explanation of the reasoning behind this is that “it will keep me honest in my investing, and force me to invest for my future”. Well, duh, I know I need to stay in for the long haul, but I don’t need to be investing in HIS future, nor the futures of the fund managers. I think they’ll do just fine without me. I also don’t mind keeping the cash in with NFPBX because it IS a decent fund; repeat, DECENT fund. I hate the deferred load, and the expense ratio of 1.48% isn’t in my sub 1.0% range, but it HAS returned 16% this year, and I can’t balk at that. But I think I can find better ways to manage the $.

In comes Charles Schwab – Honestly, it is the infancy stage, and I’m sure there may be bumps along the way. But they’ve been nothing but cordial in my journey thus far. Yea, I know, they want me for my money. If I find they’re not doing me a service, I have no qualms leaving them either; after all, I can open as many ROTH IRAs as I’d like if I really feel like it. But I am very happy so far. The one sticker so far I’m dealing with then is the fact that I’m NOT transferring my current ROTH or cashing it out (for $400 via the 5% deferred load is what I’d have to pay to get out now) so I don’t have any capital or $ to be sending to a ROTH right now, so I’m starting with the payments I PREVIOUSLY had going to Edward Jones of $100.

The payments will now be headed towards my new ROTH with Charles Schwab under one of their funds, SWEGX. SWEGX has been doing alright this year and it’s basically a mutual fund of mutual funds because it’s holdings are smaller funds, also held by Schwab. Morningstar gives it a 5 star rating. It has a 0.80% expense ratio that I like, and is a no-load fund. Finally it’s got a 12.4% rate of return so far this year, which isn’t too bad either. We’ll see how it does over the next few months, but as a starter fund and only have 100$ to start investing with, it is going to do the trick nicely I think.

Welcome to the family SWEGX!

Filed Under: advicefinancial educationInsuranceInvestingMutual FundsNet WorthPortfolioReal EstateRetirementROTH IRATraditional IRA

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  • Financial Advisor

    I agree that B shares are not for everyone but I must also say that you do not understand the true difference. I must also say that you do not understand that advice rarely comes for free. So yes B shares are a little more expensive and yes you are paying for that advisors advice. Being that he or she placed you in one of the best fund companies in the world I would say you got your money’s worth. I would also say that since you look at one year returns that you are probably less disciplined as a long term investor.Maybe your advisor was saving you from yourself I do that alot with my clients. As an advisor I never look at the short term And only look at the Long term when it comes to Retirement accounts. I did a little research of my own and found that the 10 year cost(fee) difference was 144 dollars. I also looked at the 5 year returns for the two funds. The New Perspective 5yr return was 12.64% and the Schwab fund was 9.61% Fees are one thing but when you give up 3% in returns over the next 20 years I would say that sometimes Advice and proven funds are worth 144 bucks. Good luck and try to look at the big picture next time!
    Financial Advisor:)