- Review of: Edward Jones
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Edward Jones is a full-service brokerage firm. The service can work well for large investors ($10 million and up) due to the combination of competitive advisory fees and professional investment management. Most individuals will pay heavily in annual fees, compared with other, cheaper options.
Unlike many discount brokerages available online, Edward Jones is a full-service broker. So what really comes with this type of service, and is it worth paying more? To put it simply: no.
A full-service broker is someone who provides not only the capability to invest, but also many other things like tax advice and retirement planning, as well as extensive research and knowledge. Unfortunately, being a broker also means they do not have to follow the fiduciary standard.
What Is Edward Jones?
Founded in 1922, and based in Des Peres, Mo., Edward Jones is a financial services company that focuses its business primarily on individual investors and small businesses. The company is a full-service investment broker, which means that it provides investment management services, much more so than brokerage services for self-directed accounts.
The company serves about 7 million investors and has $914 billion in assets under management. With more than 12,700 branch locations throughout the U.S. and Canada, Edward Jones has the largest number of offices of any brokerage firm in the U.S.
How Does Edward Jones Work?
The main benefit of working with Edward Jones is the financial advisor. The company has more than 14,000 advisors who work with clients on a one-on-one basis to provide individual investment advice and management. Typically, Edward Jones assigns one financial advisor to each branch office, which is why the company has so many branches. The aim is to provide face-to-face services in as many locations as possible, in contrast to the growing industry trend of engaging clients with an all-online experience.
The financial advisor gets familiar with your financial situation and goals, then builds a customized investment strategy to help you. They construct a portfolio of stocks, bonds and mutual funds that are based on a long-term buy-and-hold strategy.
Investment selection strategy. They filter stocks based on geography, track record, balance-sheet strength and company size, then narrow the field down to those that they believe have sustainable competitive advantages, and then use valuation analysis to determine a fair price for the stock.
They use four different wealth management services based on your own needs and preferences:
Guided Solutions. This service enables you to do your own investing and trading but provides you with investment guidance on stocks, bonds, mutual funds and exchange-traded funds (ETFs).
Advisory Solutions. This is comprised of fund models, and you can choose from more than 90 research models containing a variety of mutual funds and ETFs. You can have a brokerage account, in which Edward Jones will provide you with investment recommendations, from which you can make individual selections.
Estate Planning and Trust Services. Edward Jones Trust Company works in partnership with local professionals and your financial advisor to provide services.
Client Consultation Group. Your financial advisor has access to a team of more than 5,500 professionals at the company’s home office, who provide deep expertise and extensive experience in specialized areas to help in managing your investments.
Commissions and Fees
Unlike Edward Jones, a discount brokerage might be a better alternative to control your own investments. Although they might offer fewer service options, they’ll no doubt also have lower fees.
With Edward Jones, you’ll have to pay a yearly account fee of $40 for all retirement accounts, which can be withdrawn directly from either your investment account or your bank account.
This makes Edward Jones a comparatively expensive option, but if you need the extra guidance and full-service features, then this could be a good option until you learn the investing ropes for yourself.
Below are the fees for taxable accounts. It does not include the fees of the mutual funds/ETFs used within your account.
| Deposit Amount | Annual Fee |
|---|---|
| First $250,000 | 1.35% |
| Next $250,000 | 1.30% |
| Next $500,000 | 1.25% |
| Next $1,500,000 | 1.0% |
| Next $2,500,000 | 0.80% |
| Next $5,000,000 | 0.60% |
| Next $10,000,000 | 0.50% |
Additional Fees
Stocks — buying through dollar cost averaging — 2% of invested amount ($5.00 minimum)
IRAs — Annual Fee — $40
Possible Investments — Individual stocks, fixed income securities (corporate, government, municipal bonds, CDs, etc.); ETFs; mutual funds — balanced, growth, growth and income, and aggressive funds; money market funds; FDIC-insured bank deposit program.
What they don’t recommend: penny stocks, individual junk bonds, options or commodities, or positions that are deemed to be investment fads.
Account Types — Regular taxable brokerage accounts (individual and joint), traditional and Roth IRAs, Roth IRA conversions, SEP IRAs, Solo 401(k) plans, single owner defined benefit retirement plans, 401(k) rollovers, custodial accounts, trust accounts, 529 college savings accounts and Coverdell education savings accounts.
Account Protection — The Securities Investor Protection Corporation (SIPC) provides $500,000 of coverage for missing securities, including $250,000 for claims of cash awaiting reinvestment. Edward Jones purchases additional protection from underwriters at Lloyd’s. This policy covers only theft, misplacement, destruction, burglary, embezzlement or abstraction. Market losses are not covered by SIPC or the additional protection. The aggregate protection limit for all claims is $900 million. The FDIC provides insurance through the insured bank deposit program of up to $250,000 per depositor.
Clearing Agency — Depository Trust Clearing Corporation (DTCC).
Annual Fees — Edward Jones offers both commission- and fee-based financial products.
Commissions on individual trades are as follows:
The Program Fee for taxable accounts and traditional and Roth IRAs (account value/annual fee):
Minimum Deposit — There is no minimum deposit to open or maintain a brokerage account. There is, however, a $5,000 minimum to open a Guided Solutions Account.
Pros
- Local Branch Offices — They have more local branches than any other broker in the country, which is a nice benefit to have, even if you mostly do your investing online.
- Professional Wealth Management — You're getting the benefit of the investment experience of an investment brokerage that has been in the business for over 90 years. That's tough to beat with DIY investing.
- Passive Investment Platform — Since your money can be professionally managed, you're free to tend to other areas of your life, like your career or business, your family and your personal passions. Edward Jones can handle your entire investment life while you're busy with other things.
- Low Fees on High Balances — The annual management fee is 0.50% per year on account balances greater than $10 million. At that point, the fee is competitive with robo-advisors but offers much more personalized and customized investment services.
Cons
- High Fees — The investment management fees are over 1% per year, unless your portfolio is larger than $2.5 million. You can do better with either a robo-advisor or holding index funds in a discount brokerage account. Commissions on self-trades are not at all competitive with discount brokers. The high fees and commissions will discourage new and small investors.
- No Active Trading — If you're looking to trade securities actively, Edward Jones is not the platform for you. The high fees alone can make active trading extremely difficult to do profitably. It is essentially aimed at buy-and-hold investing.
- Discourages Certain Investments — The company does not provide investment advice on certain types of investments, including penny stocks, junk bonds, options or commodities. Along with the high commissions, this is not a platform to trade such investments.
- Potential to Churn Accounts — This isn't an issue that's specific to Edward Jones, but any full-service broker. Since the broker earns commissions on trades, there is a built-in incentive to trade the account more frequently to increase revenue. Of course, you could choose fee-based account management, which would result in a flat annual fee, rather than individual commissions. It also appears that the DoL fiduciary rule has the potential to limit or eliminate commissions, at least on managed retirement accounts.
Summary
For investors with up to $10 million in investable assets, we cannot recommend Edward Jones.
In today’s investment world there are much better lower-cost options. We have now robo-advisors that can manage your money for a fraction of the fees. Specifically, firms like Betterment or Wealthfront are more than suitable for individuals who don’t have complex investment portfolios. If you want access to a human advisor, we would recommend Personal Capital’s service over Edward Jones. Not only can they manage your money, but Personal Capital has a free personal finance app that’s top-notch.
While at first glance you might not think Edward Jones 1.35% starting fee per year is much, keep in mind that’s not including mutual fund fees that in total can put you at 2% or more.
It’s been said you should invest like your milk and keep it under 1%. Otherwise, for the amount you are paying, you need to make that much per year in the market just to break even. And if you are doing much better than 2%, the fees are a significant drag on your returns. Jack Bogle, the founder of Vanguard, has been quoted saying over a 50-year timeframe this difference in fees could eat away up to 70% of your returns.
Comments
This article needs to be updated to be correct if people are going to consider it when making an investment choice.
Jones advisors are fiduciaries under the new laws rolling out this week. They have always been encouraged to follow that standard even when it wasn’t the law.
If you pay a management fee of 1.35% to invest you DO NOT ALSO pay annual account fees or stock investment fees.
The ongoing fees built in to mutual funds are set by the mutual fund company and exist universally wherever that fund is held – 401k, at the mutual fund company or in a brokerage account such as Jones.
The cons provided are not accurate. Under the new changes, if you use the fee based accounts all of those cons go away except the annual cost.
However you are getting a personalized CFO for your family for that cost. We tip 15-20% or more when we eat out but people balk at 1-2% to manage your wealth. As long as your individual advisor is doing their job that should easily be made up by the flexibility of the new account.
Melissa C,
I assume you work for Edward Jones? The annual costs is a big con.
1-2% annual fees are high by most standards. In order to just break even in your annual returns, you must at least equal the fees. In this low rate interest environment, that is a much harder feat. More importantly, does all Edward Jones advisors add 1-2% alpha in their returns? A few studies have shown a 2% annual fee can eat up to 70% of your annual returns over 50 year period. I’m not against an advisor making money but it isn’t the best interest of our readers to say paying over 1% in annual fees is a ‘good deal’, when it simply isn’t and they are cheaper alternatives with similar service.
“If you pay a management fee of 1.35% to invest you DO NOT ALSO pay annual account fees or stock investment fees.” Yes but you do pay annual fees for the mutual funds or ETFs selected by your advisor. What matters is the ‘all in’ cost.
The cold hard fact is Edward Jones is very expensive and doesn’t provide great service if you don’t have very much money. A successful Edward Jones advisor makes hundreds of thousands of dollars per year managing the financial affairs of several hundred wealthy households and their time is extremely valuable. To get a piece of that time, you have to pay. If you have money (~$500k+) you will probably get good service and the fees will most likely be low to moderate and competitive with other similar companies in the industry. If you don’t have much money, it is going to be very expensive, because you are trying to compete for attention with people who have a lot more money, and pay a lot more for the advisors time than you do. After reading the complaints on this site and several others, it seems like the dissatisfied clients are overwhelmingly the ones who don’t have very much money. That is just the nature of the business.
I find all the article and comments irrelevant to my experience with EJ. I opened an IRA with EJ in 2002; all in American Funds mutual funds. They charged .75% upfront to manage my money. The fee was based on the amount of money I was giving them to invest; higher fees for less money. I haven’t paid any additional fees to EJ. My investment advisor does get money from American Funds, but not me. Over the life of my investment, I have averaged 7% per year. Since I’m not greedy, this works for me. I’ve had the same advisor for 14 years.
I recommend two websites: morningstar.com and feex.com
Go to morningstar.com and get a Quote for your mutual funds. Then visit the Expense tab and look under “Maximum Sales Fee”. If anything is listed under Initial (front-end load), Deferred or Redemption (back-end load), you ARE paying a commission. Then sign up for a free account at feex.com and add your Edward Jones account (or any other account where you have mutual funds or ETFs). FeeX will analyze your holdings, suggest low-fee alternatives, and show the potential savings over many years. I use both websites to analyze accounts for friends and family. Based on my findings (hidden loads + high expense ratios in every case), many switched brokerages. For mutual funds, I recommend Vanguard. For ETFs, any low-commission broker will do. I favor Schwab.
Edward jones Advisory Fund is by far the worst investment I have Down almost 6% over the last year.
Just transferred IRA from Edward Jones to Vanguard and of course Jones slapped me with a $135.00 fee. Vanguard $0 for in/out transfer. So done with Jones, wish I’d kicked ’em to the curb years ago.
I’m amazed when people think Edward Jones is a viable alternative. Out of the 11,000 branches out there, there might be some good “advisors.” I have a sizeable inheritance (now not so sizeable because of Edward Jones’ churning.) I have been through four “advisors” in the last year, including our trusted family advisor. Either I am treated differently from most clients, or Edward Jones just is not a good bet.
These people aren’t financial advisors. They are pushy salesmen with an agenda: to sell Edward Jones’ products or bust. They do things I consider criminal, or in any other industry would be considered criminal. My original advisor took me out of mutual funds that were doing well. He then charged me $30,000 to put me into some new mutual funds, all without my knowledge. Then, because he would no longer talk to me, I moved over to another “advisor.” This guy was an out flim flam person. I won’t go into what he did, but he sold me some stocks I didn’t want. (Edwrad jones chargest a 2% commission on individual stocks.)
My third advisor told me he was going to selll all of my assets because I refused to buy an annuity fruom him. So, I moved to a fourth. He is horrible, calls me every day when he has something to sell. He once called me in the hospital. He lies through his teeth. I recently asked him to sell an asset. He refused.
I mean, how does Edward Jones survive???? Their advisors are crooks, out to cheat people. It’s incredible Meanwhile, I have lost a sizeable portion of my investments. Now I am panic-stricken. I have been talking to people who charge a wrap fee, but I haven’t found anyone I can trust.
I’m starting to move my assets to Schwab. Hopefully they will be better. I think the problem is that I am a single woman, somewhat older, with no one to help out.
I would recommend opening a Vanguard account and put together your own portfolio of low-fee mutual funds that fits your risk profile. Try to learn some about investments and be responsible for your own finances. Don’t rely on an advisor.
Pay a visit to PaulMerriman.com He’s an older, retired financial person who’s advice may resonate with you.
Very Disappointing
If you want to do business with Edward Jones, and don’t care about your financial advisor, the company might work for you. After 14 years, my advisor reassigned me to someone in his office (someone I did not like) and refused to return my calls when I wanted to discuss my concern. Guess I didn’t have enough money in to rate his attention. That’s loyalty for you. Be aware that this is Edward Jones’ policy – they can move you around from advisor to advisor without your permission or consent. But ignoring my inquiries (both by email and phone over a 2 week period of time) – that was nothing short of rude.
I just met with an edward jones financial adviser yesterday – the quote that I got was 5.75% fee to purchase a mutual fund… We were talking specifically about setting up a roth IRA, but I am pretty sure she said the 5.75% applies to basically all purchases of mutual funds. Any help making sense of that, based on the 2% quote mentioned in this article?
Thanks!
My advice: Vanguard low-fee mutual funds.
Just finished a complaint process with Edward Jones, of course they found themselves in no fault. They cost me thousands in horrible customer service and bad advice. IROCC was even involved, and they say not the first complaint against this company. Steer clear of these thieves, it will cost you a lot more in the long run. They should be ashamed of themselves. Ripping off the public and not caring whatsoever.
Edward Jones is, by far, one of the most ethical firms in the industry. Personal financial success is directly correlated to asset allocation and risk management. It appears that a few of these responses are due to either a lack of understanding regarding market volatility or fee structures. Cheap is not always better as index funds are market- weighted and more susceptible to “bubbles”. I do sometimes use some as a core but would never use entirely. Too many intelligent people are prone to chase returns and, in the end, buy high and sell low. Ironically, this error presents itself without prejudice. Most people need an Advisor and many are wise enough to admit it.
My friend n I both got sucked into Edward Jones both lost money. It was at the time the market was still going up. So happy we got out. The market has started to go down n im sure we both would of lost much more. All they say when the market go’s down is now is the time to add more to your account. Hell that would be every day. They will tell u that there fund have high dividend stocks in them but what they do not say is u do not get the dividend.
My wife and I use Edwards Jones as a CFP (Certified Financial Planner). Our agent looks not only at investments, but insurance coverage, various retirement funds, my wife’s small business, taxes, tax accounting, college account for baby and so on. In other words, my wife have a lot going on with entire money picture and need someone to handle it. It is too much for the young family to keep up with. Our agent checks in 4 times a year. Again, full service brokerage is for someone that just does not want the extra hobby of managing their money. It is too time consuming and I would rather do something else than read Money magazine, WSJ and watch PBS Money Hour. We look at this full service as retirement planning for the long haul and money management for the entire family. The cost to us is worth it and in this sense, they do a great job. They have to get paid somehow.
New technology makes financial advising easier for the average person. Online robo advisors such as Betterment, Wealthfront, FutureAdvisor, etc. make the need for high fee charging firms like EJ a dinosaur. If you want/believe in the face to face value of having an advisor to talk to then pay the higher fees.
The above arguments and comments highlight the problem with the financial education and perception of the mainstream. In this “back-and-forth” between everyone in this thread are not even being discussed.If you people are going to argue about fees and performance, and passive VS managed, and DIY VS an advisor, you must understand that there are simple, timeless truths at the foundation of the argument that you are failing to integrate here.
1. Regardless of the position you take on active VS passive management, the real issue is that MOST human beings cannot handle the volatility that comes along with any investment that (for example) tracks the equity markets (S&P 500 we will say) and yields a similar long term annual average rate of return. Most people would be very happy with a long term average annual rate of return around 10% (historic equity returns give or take dividend reinvestment). The problem is that people CANNOT deal with the inherent and recurring temporary declines, even though those declines are simply a means to an end of their long term performance. THEY CAN’T HANDLE IT. Humans’ strongest emotion is fear and fear is not navigated with rational thinking. How many people do you think piled into the technology euphoria in the late 90’s (not to mention, companies with no earnings) only to soon witness a collapse of that particular sector and then decide to sell what they owned at a staggering loss of 40, 50, 60%, etc? I’m quite certain the 1% “cost” to a trusted advisor who kept his/her clients’ allocation and emotions in check before, during, and after that time period ends up being extraordinarily valuable over the long run, even if only to navigate just these recurring fearful times. How about 2008? Even most people who owned even a quality portfolio of investments who didn’t have a proactive reassuring partner in a good advisor began moving money into cash after the majority of the downturn was behind us. Once the S&P500 doubled and tripled from the lows, humans then felt comfortable adding money back into equities. They thought the sky was falling and that the world was ending… just like those before them had thought so many times over the history of the markets (who were wrong every single solitary time, mind you).That’s human nature… and that’s why people don’t achieve the long term returns that they SHOULD, regardless of investing in index funds or managed funds without a good advisor… even if only to keep them from making disastrous mistakes.
2. The second part that no one can ever seem to take into consideration when arguing fruitlessly is that any investment account/portfolio/mix/allocation/plan… whatever you choose to name it… should have one sole purpose: to reach the goals that those human beings have over the long term (ie retiring at age 62, living until 90, spending $5000 per month in today’s dollars and increasing that by historic cost of living increases annually… not to mention funding some of their kids’ or grandkids’ education, addressing potential medical care costs, navigating a dynamic tax environment, understanding the impacts of social security filing strategies, understanding the impact of guaranteed income VS the reliance rate on their investment portfolio to maintain their lifestyle, and so much more). Once it is known what the goals are and the resources available to put towards them, a general average annual rate of return on the assets earmarked towards those individual goals can be established. For some, a 6% average annual rate of return is sufficient over the long term… for others, 8% may be required (unless working longer or spending less is an option they are willing to budge on). At the end of the day, if your long term goals are attainable with a 5% AARofR, why would you want (or need) to put yourself through the unnecessary emotional stress that an investment mix designed (by historical measures… and notice I said investment MIX not investment selection) to provide an AARofR of 9% will inherently put you through? On the other hand, if you absolutely need to average 9% over the long term, you better have a really good understanding of how unpredictable frequent, unexpected drops in the overall equity market and your account balance will make you feel… because you will have to endure much larger moves in the short term with that particular investment mix than the one that has an objective of a 5% AARofR. It is what it is. There is no magical investment ferry who will make your investments perform at some “outperforming” level (outperforming what, by the way?). I haven’t even touched on how maintaining the proper allocation (mix of stocks vs bonds AND exposure to the different asset classes among those) is crucial to maintaining your proper investment mix to reach your goals with the least amount of volatility (some call this “risk”) in the interim.
So, once a good advisor articulates to you the timeless, simple truths of 1 and 2 above, 1% per year to get you to where you want to be in the most efficient way possible shouldn’t sound too bad. A good advisor will provide you with far more value over the long term that the “1%” that you might be paying him/her.
Absolutely correct that any firm can have scoundrels. The culture of a firm can lean toward or against misbehavior. As a 25 year EJ vet, I can tell you our culture leans against misbehavior.
No matter where you put your money i.e. stocks, mutual funds, bonds, life insurance, annuities, etc etc etc etc, you always pay the piper……Over the last 20 years the craze has been no load index funds all the way……..now the tide is turning towards active management funds……….Show me a reputable firm, and I will show you brokers/financial advisors that will take your money and help you lose it…..Be it Edward Jones, Raymond James, Merril Lynch Wells Fargo etc etc…..
Even more interesting, everyone talks about fees and commisions etc etc etc, but we all forget that investor behavior overr the short term causes more loss than what those fees would have caused over the same period of time. Behavior and good research and sticking to a principled plan of proper asset diversification and proper rebalancing of retirement accounts will always win over any fees. The fees and expenses that an investor pays better be worth what the returns are given the context of the market etc etc etc……….Edward Jones is a good firm and has some of the best long term investors in the market today.
I agree with the pharmacist. Referrals from those you trust, with nothing to lose or gain if you do or don’t follow their advice, is the best kind of referral.
2% in fees will slash your account by 65% over a 40 year period. John Bogle calls it the tyranny of compounding cost overcomes the miracle of compounding interest. I’d stick with low cost passively managed funds. It’s been proven active mutual funds underperform their benchmarks over and over and over. Why pay all the fees for sub part performance?
Edward Jones will tell you anything and everything to get your money and your children money. At the end you lose. Either the market is up and you make less than you should or the market is down and you lose more than you should. All Edward Jones cares is they are making money and leaving the risk to you.
ARE YOU NUTS?
EDWARD JONES IS A GIANT RIP OFF
STAY AWAY FROM THEM
THEY ONLY WANT TO PUT MONEY IN THIER OWN POCKETS
THE FEES ARE WAY TO EXPENSIVE
STOP LYING TO PEOPLE
GO TO VANGUARD MAKE AND KEEP MORE MONEY
A good advisor can make you 1% in a single day, so why worry about 2% over a year? Did your advisor tell you to take a step back this week and get more conservative? My EJ advisor did!!!
If they don’t get you results OK, but Jones seems to outperform in down markets regardless. Great research department. Look at their BUY rating stocks vs. any other making recs.
Most of the people making comments above are not legally allowed to give advice per Series 66 regulations, so please take their advice with a grain of salt, and don’t give your money to a cheap, underperforming marketing guru like Vanguard.
History has proven that over time, how many fees you pay is the number one determining factor in returns achieved. Don’t be fooled. Read The Book: A Random Walk Down Wall Street. The book was originally written in the 1970’s and has been updated as time has passed. It’s damming evidence against those who would have you believe paying high fees in exchange for “expert” management (fundamental and technical analysis). It is a lost cause. Passive funds like Vanguard consistently outperform these fee laden mutual funds that the Legion of EJ advisors are pushed to sell. This is fact not opinion. At any given time, 75% of passive funds will outperform. Over time, the number is 100%. Hence the name of the book. It’s completely random and one mutual fund doing well 10 years later is at the bottom of the heap. Don’t be fooled by the slick marketing of EJ. Their high fees are guaranteed whether you make money or not.
Fees are not the number one determinant of returns. It is asset allocation.
Very few managed mutual funds outperform total stock market index funds over 10+ years (>3-5%). Vanguard’s Total Stock Market index fund has had an annual return of 9.63% since inception in 1993 diversified over 3,800+ stocks with an annual expense ratio of 0.17. When you add in the 1-2% annual fees charged by most managed funds, it’s difficult to match the performance of a broad based index fund.
People have mentioned that the 1-2% fees don’t make that much of a difference. However, if you run the numbers on an investment calculator over a 20 year horizon the variances are staggering.
$100,000 invested at 9.50% in Vanguard’s Total Stock Market Index Fund for 20 years results in $614,641
$100,000 invested at 9.50% in a similar managed fund less 1.5% in annual fees for 20 years yields $466,096
The difference is $148,545 or about $7,500 per year. Seems like a lot of money to spend for financial advice especially when very, very few managed funds beat the broad market index over 10 year period. If you earn $50,000 per year in salary, this means that you’ll have to work three additional years to pay for that financial advice.
Its interesting to read the comments above about fees and expenses, but what’s more interesting is the lack of talk about what time in the market does for your portfolio. I’ve learned a lot by watching others with their portfolios and their advisors and have watched how their value has grown because of the amount of time they spent in the market in good quality stocks, mutual funds, etc.
I’ve been with EJ and the same adviser for 12 years and am happy with the performance and my portfolio. Its done quite well, and now I’m moving into stocks from mutual funds. But keeping my mutual fund in addition to the stock for diversification.
I am moving from EJ after 10yrs. My broker recommended the managed investors acct, which I changed to. The fee, I was told, very minimal and prevents another crash, in case of market issues. So the last two months they have e lost me money. the kicker is they still take the fee. not just any fee they take the fee off the money I already have invested every single month. So back I go as they double dip. How can you charge me a fee on the initial amount I have, even when you lose me money? I called my broker to change back and it’s 2.5% to get back into the same funds I’m in, but unmanaged!! Now they’re going to take $7500!! Not me… I am out! Don’t go wth the managed account!
Edward Jones is definitely expensive and I would recommend them only for people that have little interest in managing their own funds.
Vanguard offers the lowest expense ratios of the major investment firms that I have found (0.19% vs1.08% industry averages). They have zero purchase and redemption fees on most all mutual funds. 171 of 188 Vanguard mutual funds have outperformed their Lipper peer group averages. If you invested $100,000 with Edward Jones and purchase American mutual funds at 4.5% front end load and an expense ratio of 1.0% versus a comparable Vanguard mutual fund at 0% front end load and 0.2% expense ratio and left it invested for 10 years. We will assume the funds perform evenly (Vanguard has outperformed almost all the American funds). The Edward Jones account will cost you over $20,000 more than Vanguard! For that amount of money people real should take the time to learn about investing.
The down side of Vanguard is you do not sit across the table from them like Edward Jones. However, they have their “concierge” service for account under $500K, “select” service for accounts $500K-$1MM, and “flagship” service for $1MM+.
I have dealt with both. Edward Jones was good for me until my representative retired then I found out what it was like to have a person (the replacement) who was looking out for themself and not me. Vanguard doesn’t call me with the latest “hot” deals, but they have provided a very good return on my investments at low cost.
So overall I agree with Jim Jones. However I do know people that are not very good with money and would be better off with Edward Jones than doing investing themselves…even though Vanguard makes it really simple.
Dale, I am transferring my iPad. Thx for the tip on vanguard. Do you use a discount broker and handle your own acct? Just wondering who u use if u do. Have a great day… Nan
Why would you pay 2% to a person that does nothing? They make money when you buy more and charge a 1.5% annual fee. Look into Vanguard, Fidelity, T Row Price, and other low cost mutual funds/ETF’s.
I was with EJ for 2 years and never got any sound financial advice from my broker. There is a good book out there called The Intelligent Investor, that talks about low cost funds, dollar cost averaging, diversification, and etc. It can get into the weeds a little, but it has good ideas for the common investor. I think you can get by with 3-5 index funds and not pay a financial adviser. What does financial adviser even mean? I think I’m qualified for posting this post, so give me your 2%. Your EJ FA probably has BMW or Benz, thanks to you.
EJ is a joke, and as long as you can count on your own hands and feet, do your own investing. Do a little reading and you can save your 2% annual fee, 5.25% front loaded funds, and not but junk funds that don’t even produce over the long haul.
Have been with EJ for 6 years they use to recommend that when you do start drawing on you 401 that you take no more than 5% now that’s down to 4% because they can’t grow your account I guess not with them getting 2% plus all the trades they do on your behalf in the advisory solutions account. I have really only recently got concerned about the fees when I started to study the statements. Am changing going to Fisher Investments lower fees less complaints and a good track record. And my money goes where Ken Fishers goes. Hate to change have been friends with advisor for years at EJ but it’s about the dollar.. I need it more than they do and it means thousands for me. Plus customer service very reluctant to answer a question always want to refer you to agent but they are not always available.
Fisher is a marketing shop. I much prefer EJ where I can walk down the street to see my guy. All in -I pay 1% including mutual fund fees.
Sorry Patches, but your EJ FA is not just charging 1%. I’ve dealt with EJ for most of my life and finally decided to educate myself. The actual fees charged at EJ are staggering and most are completely hidden. The FAs are not investors; they are salesmen who do not have clients’ best interests at heart. They are ruthless, in it for themselves and EJ, EJ should have gone under as a company a long time ago. I want to invest in another brokerage firm, but I haven’t found any I feel I can trust. For some reason, the problems at EJ seem much more acute lately. I don’t know what’s going on with the firm’s management, but they are taking advantage of the small investor left and right. All of their FAs flout SEC and FINRA regulations, big time.
They are iShares ETFs. ETFs of ETFs.
If you are Socrates, you should be able to figure it out. LOL
Agreed. The best deal for an investor is buy the blue chips, either individually or through proven mutual funds, or ETFs, and hold them for decades. If you do that, whether you paid $7 or 5.75% to get in, it really won’t matter. You will do fine. Check out AOA and AOR. Your broker probably won’t point them out to you.
What is AOA and AOR?
There are studies showing that investors do not get the return that various asset classes have returned, basically, because they buy high and sell low. A program that puts a discipline in place, automatically rebalances, and removes emotion from the investment decision is easily worth a percent or two to most investors.
The studies also show how financial advisors lag index funds (and essentially make the same mistakes). Those EJ locations are run by humans. It’s not (computerized) quantitative finance (like you’re implying).
Good advice. Get to know your advisor. If you are not communicating comfortably with your person, find someone else. I am a 20+ year Edward Jones advisor. The most important person in the relationship is you.
An element left out of this discussion is the integrity of your FA, regardless of the brokerage firm involved. If you are dealing with a crook, you will get screwed every time whether it be by EJ, ML, Schwab or Scott. The integrity factor cannot be easily discerned. Advice from TRUSTED friends or TRUSTED business associates can be of utmost importance in the selection of a financial advisor. Watch out for the smooth talkers and get to know your FA on a personal level and the trust factor will begin to show itself. If you do not trust your FA, “get the hell out of Dodge” sooner rather than later. As a 76 year old retired pharmacist, I have dealt with 5 different advisors with different firms and this advice is based on 50 years of hard-earned experience.
I am a 20 year plus veteran broker. Here is an anology I use. Say your car needs repair AND you know how to fix it. Then all you need is a parts store. But say you do NOT know how to fix it. Then you need a Mr. Goodwrench. The hitch, though, is knowing what you think you know .
No it is finding the right person to fix it.
The adviser I have with Edward Jones has done a stellar job over the last 13 years!!! As for the so-called conflict of interest, I disagree, a financial adviser has two ways of getting paid, via comissions and sales charges, or a percentage of your total portfolio, usually 1 to 2% per year. Depending upon the size of the portfolio under management, the first is ultimately cheaper. As for the conflict of interest, if your adviser and you don’t see eye to eye, and you continue to stay with him or her, then its your own fault. An adviser is not the final say or word, your word is final, and if you allow an adviser to have that, then you have lost control over your investments. A good investor knows when to speak up and when to allow the adviser to lead. It is through a comfortable, trust worthy, respectful, professional relationship that solves this so-called conflict of interest.
Regardless of the firm its all about the adviser and your relationship to that adviser. If you see yourself knowing and understanding better than any adviser, then its pointless to have a financial adviser.
Lastly, the fees are not higher than average, actually they are cheaper!
Over the last 13 year the market has gone straight up. Did they advise u to get out.
How has it done since the start of this year? U would of made more just buying the index 13 years ago a lot more.
This is contradictory. First of all did you forget about the 49% intrayear decline in 2008, had you owned that index? The market is down 7% this year so far and you are mentioning “getting out”. If you had bought the index 13 years ago in 2003, what would you have done in 2008? This is the part people cannot grasp. Unfortunately most people bailed once most of the decline had already happened. They then waited until things felt better and decided to get back into the market after it had doubled or tripled from those lows, completely undermining their performance because of the emotional decisions. Two points to this… 1. Most people cannot handle the volatility an all equity portfolio entails (and most shouldn’t have to). 2. Declines are temporary and unavoidable and are part of your overall long term average rate of return.
Well did Edward Jones advise you to get out in 2008? An yes if you own the index 13 years ago u still would be way ahead of any Edward Jones funds. It just take a simple click to see where the market was 13 years ago n where it is know.
You do realize that 2% per year eats dramatically into your returns?
See the PBS documentary where this is discussed:
https://investorjunkie.com/28084/retirement-accounts-flawed/
That’s very true, and that’s why I prefer the commissions than the 2% a year. No matter what your returns are you are losing 2% every year plus any expenses if you are invested in mutual funds and efts. So in a down market of 10% you would lose an additional 3% or more.
I don’t think anyone would want their being eaten by an advisor that’s really not looking after your best interest because he’s making a killing off you and your high net worth portfolio. In actually think the percentage payment to an advisor is more of a conflict of interest per say. Regardless of their performance they get 2% a year from you.
I’d rather pay commissions because it would encourage buying in times when everyone else is selling and not buying when everyone else is being greedy and buying like ravenous animals! Make those commissions look even cheaper because of when you made those investments into your portfolio.
Larry, don’t confuse price vs. value. I don’t mind paying a 2% annual fee if I feel like I am getting my money’s worth. The question is, what are you getting in return for the costs? Is it access to otherwise unattainable money managers, daily portfolio monitoring, automatic rebalancing, consistent asset allocation, enhanced research by the portfolio team, etc…?? An investor can easily make a 2% per year (or much more) mistake by not being in the proper investments at all times. Two quotes to leave you with….
As Ben Franklin said, “The bitterness of poor quality remains long after the sweetness of low price is forgotten.”
Oscar Wilde — ‘Nowadays people know the price of everything and the value of nothing.’
so have u got your moneys worth since the start of this year. did they advise u to get out or r they running on the last 5-10 years of upward movement. U will understand more what they do not do when the market starts to shake.
Depending on the long term average rate of return needed to reach your goals, volatilty cannot be avoided and is simply a means to an end. The historic annualized rate of return on equities is about 10% (which really doesn’t mean anything since most people don’t need that kind of return to reach their long term goals which also means they don’t need to deal with the greater volatility (ups and downs) that an all equity portfolio will entail) The average investor’s rate of return is about 5%, mostly because they make terrible emotional short term decisions and try to time the market which is consistently impossible. The only way to lose money is to sell investments when they are down. If one does not understand that temporary, sometimes large, declines will always exist then he/she either needs more education on the topic. Temporary declines cannot be avoided over any long term cycle. But it isn’t the declines that affect our returns, it’s how you react to them. ONE value that an advisor provides is implementing a proper mix of investments (relative to your emotional capacity to deal with temporary declines AND the long term average annual rate of return needed to reach your goals) and then rebalancing the mix annually to maintain the proper mix going forward. Getting your money’s worth has nothing do do with your portfolio’s value not dropping during market corrections. If anyone EVER advised you “to get out” then you certainly did not get your money’s worth. Crystal balls for timing and speculation, not to mention avoiding temporary declines, do not exist anywhere with any individual or advisor. If one assumes that this should be any part of an advisor’s value proposition, he or she is gravely mistaken.
U got to be joking. I own a seat at the CME an make my money by getting in an out most every day. I tried Edward Jones an as the market went up over 1000 points it moved up very little when the market went down 500 point I was at a lose. If one is never going to tell u when to move you money out then you are not getting you moneys worth. Are you up from the begging of this year? would you not want to of sold your account into a money market then reinvest 2000 point lower? According to you that would be no. Take the lose n wait until the next bull market 10 year from now. Ask your adviser where the dividend go’s from the dividend stocks in your fund. Not to you.
sorry but the cons outweigh the pros for me. No online trading it would defeat the purpose for me. I guess you really have to look at how you are as an investor some people may want someone to do everything for them. The fees I couldn’t deal with either. Mine are free with BOA.
Nothing is free with anyone. Last time I checked, BOA was not a charity or a non-profit company. They just choose not to tell you how you are paying.
You need to check again. Your best advice is free. I know I retired at 50. Let Edward Jones control some of my money only to find my dog did a better job.
The 2% load fees are horrific and morally criminal. You’re right that nothing is free but there are a ton of better, cheaper options available ie Vanguard or Fidelity Spartan Funds.