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Edward Jones' Proprietary Funds Are Outselling Nearly All Active Managers
The more I read, the more I think VMVFX (and maybe a bond fund, if one doesn't want to view SS payments as a bond.)
I look at fees as a percentage of what I earned that year. If I pay 1% and earn 5%, I pay 20% of earnings. (VMVFX still costs me >6%.) If I lost money, I don't even want to go there. If someone had been with me from year zero (which NEVER would occur, because I was in debt at year zero), had advised me well, and I had on the average earned 5 to 8 X her charges yearly (10 x would be better), I'd probably be happy, even if she had taken 15% or more of my earnings.
But, if someone wants me to pay them $50K - $200K over 10 years, they had better promise me $0.5 to 1M better than VTI during that interval to justify their cost. If all they are offering is downside protection, they had better cost much less. (Timing may be everything, but it's extremely difficult, and you probably still lost money.)
Since I don't believe it is 4X more difficult to advise a $2M portfolio than one of $500K, I would opt for hourly reimbursed advice even if it's padded by a couple of hours, if I trust the adviser.
If you have accounts with Edward Jones, ask your broker and branch manager to provide you with a written document that says in just a few sentences that he/she will always act as a fiduciary and put your interests ahead of his/her employer:
"I will always place the best interest of my clients first. I will act with prudence. I will not mislead clients, and I will provide conspicuous, full and fair disclosure of all important facts. I will avoid conflicts of interest, and I will disclose any that may arise and manage them in my clients' favor."
Then ask them to sign it. They will not sign such a document. This will not happen in today's rules, since broker/dealers, banks, and insurance companies are held to a much lower standard. What they recommend/sell to you merely has to be 'suitable', not necessarily the best option for you. That in itself should say more than all of the blather, including mine, on this page.
This is not to imply there are not some really good, honest folk who work for Edward Jones. There are. Just remember their first loyalty is, by definition of the standard of their employment, to their employer, not their clients. No matter how honest a broker/rep/salesperson is, if they will not or cannot sign a fiduciary oath, you need to ask yourself why you would trust your financial future to that company. This also does not mean everyone who will sign this document is trustworthy. That is another issue in itself. But at least you will know up front what to expect from the company who signs the paychecks.
Edward Jones' statement: -Our responsibilities when providing brokerage services ... Act under a suitability responsibility to you - Our responsibilities when providing investment advisory services ... Act under a fiduciary responsibility to you
Fidelity's statement: - When we act in a brokerage or insurance agency capacity, we do not have a fiduciary or advisory relationship with you - Investment Advisory Services ...to retail investors ... are offered through Strategic Advisers ... When we act as an investment adviser, we are considered to have a fiduciary relationship with you
Hard to tell the difference. It seems that Fidelity is saying that unless you're paying them for advice, you're not getting any, and there's no fiduciary standard.
I wonder why BobC singled out Edward Jones about signing his fiduciary statement and did not have it apply to any brokerage or advisory firm who any investor might choose to deal with?
My thinking is that few would sign it, not only at Edward Jones but other firms as well.
Hi @Old_Skeet I read BobC's write as related to this thread title in particular; and that he noted "if you have accounts with EJ." I also related this to any similar circumstance with an advisor from or with whomever; as with "wealth advisor" from organization "X". There are many forms of business providing a similar service as does EJ. My takeaway............. Catch
I attempted to fit this to other similar business models with this statement from my post"I also related this to any similar circumstance with an advisor from or with whomever; as with "wealth advisor" from organization "X".
So, yes it is a fitting statement; noted from BobC.
Comments
I look at fees as a percentage of what I earned that year. If I pay 1% and earn 5%, I pay 20% of earnings. (VMVFX still costs me >6%.) If I lost money, I don't even want to go there. If someone had been with me from year zero (which NEVER would occur, because I was in debt at year zero), had advised me well, and I had on the average earned 5 to 8 X her charges yearly (10 x would be better), I'd probably be happy, even if she had taken 15% or more of my earnings.
But, if someone wants me to pay them $50K - $200K over 10 years, they had better promise me $0.5 to 1M better than VTI during that interval to justify their cost. If all they are offering is downside protection, they had better cost much less. (Timing may be everything, but it's extremely difficult, and you probably still lost money.)
Since I don't believe it is 4X more difficult to advise a $2M portfolio than one of $500K, I would opt for hourly reimbursed advice even if it's padded by a couple of hours, if I trust the adviser.
"I will always place the best interest of my clients first. I will act with prudence. I will not mislead clients, and I will provide conspicuous, full and fair disclosure of all important facts. I will avoid conflicts of interest, and I will disclose any that may arise and manage them in my clients' favor."
Then ask them to sign it. They will not sign such a document. This will not happen in today's rules, since broker/dealers, banks, and insurance companies are held to a much lower standard. What they recommend/sell to you merely has to be 'suitable', not necessarily the best option for you. That in itself should say more than all of the blather, including mine, on this page.
This is not to imply there are not some really good, honest folk who work for Edward Jones. There are. Just remember their first loyalty is, by definition of the standard of their employment, to their employer, not their clients. No matter how honest a broker/rep/salesperson is, if they will not or cannot sign a fiduciary oath, you need to ask yourself why you would trust your financial future to that company. This also does not mean everyone who will sign this document is trustworthy. That is another issue in itself. But at least you will know up front what to expect from the company who signs the paychecks.
Thank you.
Catch
-Our responsibilities when providing brokerage services ... Act under a suitability responsibility to you
- Our responsibilities when providing investment advisory services ... Act under a fiduciary responsibility to you
Fidelity's statement:
- When we act in a brokerage or insurance agency capacity, we do not have a fiduciary or advisory relationship with you
- Investment Advisory Services ...to retail investors ... are offered through Strategic Advisers ... When we act as an investment adviser, we are considered to have a fiduciary relationship with you
Hard to tell the difference. It seems that Fidelity is saying that unless you're paying them for advice, you're not getting any, and there's no fiduciary standard.
My thinking is that few would sign it, not only at Edward Jones but other firms as well.
I read BobC's write as related to this thread title in particular; and that he noted "if you have accounts with EJ." I also related this to any similar circumstance with an advisor from or with whomever; as with "wealth advisor" from organization "X".
There are many forms of business providing a similar service as does EJ.
My takeaway.............
Catch
I attempted to fit this to other similar business models with this statement from my post"I also related this to any similar circumstance with an advisor from or with whomever; as with "wealth advisor" from organization "X".
So, yes it is a fitting statement; noted from BobC.
Take care,
Catch