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Mutual funds with 5.75 Load? – Rollover IRA options

Home Retirement Accounts Mutual funds with 5.75 Load? – Rollover IRA options

  •  tintin 
    Participant
    Status: Spouse
    Posts: 20
    Joined: 01/07/2019

    My wife who is a physician recently rolled over her 401K (over 500K) to a rollover IRA. We are working with a financial advisor who is pitching a number of mutual funds with 5.75% front load and expense ratios of 0.8% to 1.33%.

    Initially, he was selling us Fixed Indexed Annuity with 15% of profits kept by the annuity company ( I am forgetting the technical term) but as we read more about them on this forum, we realized that we may be leaving a lot of money on the table even if we select something like S&P indexed annuity. We declined to invest in Annuities. So these mutual funds are the recommendation now.

    I had setup her original 401K using a number of index funds and it returned an average of 8.64% over last 10 years – without any financial advisor.

    We are feeling that the new rollover IRA fund options may not be the best choice for us. I would rather pick 3-fund strategy from Boglehead plus add REITs to it. I can go with Vanguard as they offer cheap index funds for all sectors/markets.

     

    I am feeling skeptical about looking for another advisor at this point and I think we can do better in long run if we improve our financial literacy.

    Any suggestions? We are exhausted thinking about our options and are stressed out!

    #179252 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 6660
    Joined: 01/09/2016

    I can’t imagine a question with a more obvious answer. Whatever you decide to do with your money, it should not involve your pseudo-advisor. Except for a transfer, of course.

     

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~ 270-247-0555
    https://fox-cpas.com/for-doctors-only/

    #179259 Reply
     jacoavlu 
    Moderator
    Status: Physician, Small Business Owner
    Posts: 1676
    Joined: 03/01/2018

    Simple. Call Vanguard and tell them you want to rollover an IRA. You just saved $28,750 from avoiding the load.

    The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVA

    #179268 Reply
    Liked by Vagabond MD
     ZZZ 
    Participant
    Status: Spouse
    Posts: 178
    Joined: 06/18/2018

    Exhausted and stressed out? Why? It’s not that hard.

    ‘We’re feeling the new IRA fund options might not be the best choice. ‘ You need to man up, this isn’t a ‘feeling’ and a ‘may not be’ thing…those are abjectly terrible choices, you’re being fleeced by a self interested salesman. Run.

    You’re correct in noting that you could do better if you improved your financial literacy. You seem to puff your chest a bit in touting your 8.64% annualized return over the last 10 years ‘without any advisor’. The S&P returned 12.6% over that time frame (with div), so not sure what sort of allocation you picked for you early 30s (10 yrs ago) wife, but it dramatically underperformed a ‘dumb’ S&P index.

    You’re smart to be waking up to it, now get to educating yourself and I bet you and you’re wife are smart enough to do much better over the next 10 years.

    #179276 Reply
    Liked by tintin
     Peds 
    Participant
    Status: Physician
    Posts: 2661
    Joined: 01/08/2016
    My wife who is a physician recently rolled over her 401K (over 500K) to a rollover IRA.

    Click to expand…

    out of curiosity why? my guess is because they told you to…..

    how are you going to do the backdoor rIRA? or is that not important right now?

    We are working with a financial advisor who is pitching a number of mutual funds with 5.75% front load and expense ratios of 0.8% to 1.33%.

    Click to expand…

    incorrect. you are working with a salesman who is taking you to the cleaners. glad we cleared that up.

    ( I am forgetting the technical term)

    Click to expand…

    ****

    We declined to invest in Annuities.

    Click to expand…

    continue that

    I had setup her original 401K using a number of index funds and it returned an average of 8.64% over last 10 years

    Click to expand…

    kinda meaningless without knowing what you picked, but it doesnt matter.

    I would rather pick 3-fund strategy from Boglehead plus add REITs to it.

    Click to expand…

    thats called a core 4. look up rick ferri.

    I can go with Vanguard as they offer cheap index funds for all sectors/markets.

    Click to expand…

    yes and fidelity schwab etrade tda etc

    I am feeling skeptical about looking for another advisor at this point and I think we can do better in long run if we improve our financial literacy.

    Click to expand…

    this is the best sentence youve written yet.

    We are exhausted thinking about our options and are stressed out!

    Click to expand…

    without knowing anything else about your plan, accounts etc….just pick a target date fund (TDF)/ lifestrategy fund (LSF) that meets your current asset allocation (AA) and then get back to it in the future.

    #179277 Reply
    CordMcNally CordMcNally 
    Participant
    Status: Physician
    Posts: 1420
    Joined: 01/03/2017

    Keep reading and learning and stick to your plan to do the 3 fund portfolio and REITs. You just saved yourself lots of money (and future headache).

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #179281 Reply
     G 
    Participant
    Status: Physician, Small Business Owner
    Posts: 1248
    Joined: 01/08/2016

    Good advice above. No need to stress. If you literally do nothing, you will be saving money (as opposed to following advice of your advisor); you can always return to the issue after you have learned more.

    #179282 Reply
     G 
    Participant
    Status: Physician, Small Business Owner
    Posts: 1248
    Joined: 01/08/2016

    And if you’re feeling feisty, have your advisor come to this page to post his rationale because an outside observer might conclude that he is trying to fleece you.

    #179286 Reply
     jhwkr542 
    Participant
    Status: Physician
    Posts: 905
    Joined: 02/15/2016

    So what was the point of rolling the 401k into the IRA?

    #179291 Reply
    childay childay 
    Participant
    Status: Physician
    Posts: 765
    Joined: 01/09/2016

    Wow.  You did the right thing, obviously.  I am assuming the $$ is currently sitting in money market or similar in the IRA currently.

    Does your wife currently work?  If she has a current 401k plan that would accept a rollover that would be a better option than an IRA.  Or if she is self-employed or has some 1099 income you can open a solo 401k plan for her, and roll the 500k into that.  No advisor needed.

    #179296 Reply
    Liked by tintin
     tintin 
    Participant
    Status: Spouse
    Posts: 20
    Joined: 01/07/2019

    My wife’s employer changed and the 401k plan of the previous employer was terminated for some reason. The advisor told us initially that he makes 0.5% on purchase and 0.5% on sale of stocks in new IRA. The front load fee was not disclosed. I guess I should have asked more questions before parking money in an IRA with him 🙁

    #179322 Reply
     Larry Ragman 
    Participant
    Status: Other Professional
    Posts: 357
    Joined: 08/30/2018

    Tintin, you are getting a response here from knowledgeable DIY investors. Listen to them and follow the advice, but try not to beat yourself up. Once in my twenties (a long time ago) I let an advisor/salesman talk me into a front ended loaded investment. It felt wrong at the time, but I did not have the experience to articulate why. Without WCI (or anyone, really) to talk to about it, it took a year before I realized it was a bad move and I just needed to let the sunk cost go. You are on the right path.

    #179352 Reply
    Liked by jfoxcpacfp, tintin
    ChadCFP ChadCFP 
    Participant
    Status: Financial Advisor, Website Sponsor, Small Business Owner
    Posts: 60
    Joined: 10/04/2017

    My wife’s employer changed and the 401k plan of the previous employer was terminated for some reason. The advisor told us initially that he makes 0.5% on purchase and 0.5% on sale of stocks in new IRA. The front load fee was not disclosed. I guess I should have asked more questions before parking money in an IRA with him

    Click to expand…

    Sheesh! Good thing you posted BEFORE you went that route. It’s sad that these “advisors” are still out there.

    The posts above are all great, the power and knowledge of this forum/group is amazing.

    If you are looking for someone to talk too with some guidance, the Vanguard option is a good one. I believe they are at .30% for their planners.

    There are also some robo-advisors (Betterment, Wealthfront, Personal Capital, etc…) that offer investment management only for ~.25% or many now offer access to CFPs for ~.40%. They seem to change their pricing often, so I may not be 100% correct but it should be in the ballpark.

    Kudos for taking a step back, acknowledging something didn’t feel right, and making a change. Unfortunately, we have seen many make the mistake and then look for help and with many financial products, once you “sign here” it is difficult to fix.

    Chad Chubb, CFP ® | WealthKeel LLC
    https://wealthkeel.com/wci | Gen X & Gen Y Physicians

    #179364 Reply
    Liked by tintin
     jhwkr542 
    Participant
    Status: Physician
    Posts: 905
    Joined: 02/15/2016

    My wife’s employer changed and the 401k plan of the previous employer was terminated for some reason. The advisor told us initially that he makes 0.5% on purchase and 0.5% on sale of stocks in new IRA. The front load fee was not disclosed. I guess I should have asked more questions before parking money in an IRA with him

    Click to expand…

    Does your wife’s new employer offer a 401k and, if so, does it accept incoming rollovers?  That’s probably the best place to move it to in order to keep taking advantage of the backdoor Roth IRA.

    #179393 Reply
     tintin 
    Participant
    Status: Spouse
    Posts: 20
    Joined: 01/07/2019

    We will have to check with the new employer about this option. I will do it first thing tomorrow morning. I am not familiar with backdoor Roth IRAs and need to read about them on this site.

    #179403 Reply

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