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Mutual funds with 5.75 Load? – Rollover IRA options

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  • Drop it into MD Drop it into MD 
    Participant
    Status: Physician
    Posts: 440
    Joined: 09/20/2018

    I have come to value your opinions here in the forum.  I am not sure what an outsider would think.  Sometimes hearing it from multiple people in different ways help.

    Thanks

    @peds yes you are correct but I already tried the math approach.  Some people just do not want help I guess.

    #179616 Reply
     tintin 
    Participant
    Status: Spouse
    Posts: 20
    Joined: 01/07/2019

    @chadcfp, the 529 plan for our kids is John Hancock Freedom 529 based in Alaska

    #179740 Reply
    ChadCFP ChadCFP 
    Participant
    Status: Financial Advisor, Website Sponsor, Small Business Owner
    Posts: 60
    Joined: 10/04/2017

    @chadcfp, the 529 plan for our kids is John Hancock Freedom 529 based in Alaska

    Okay, thank you. Similar issues noted with the other advisor-sold plan. It does look like that plan offers enrollment-based portfolios which is the same thing as age-based portfolios.

    For example, JENAX is a portfolio option for kids 0-6 with high equity (assumed college enrollment 2029-3032). It still has a 5.00% load as an A-share. The total annual fee is 1.31% which includes .55% program fees and .76% in fund expenses.

    Use this link to find the investment or investments from your 529 statement, click on the fund symbol, and then go to the fees and expenses tab. That will list your initial sales charge and ongoing fee (use the “total annual asset-based fee” which includes program fees and the expense ratio).

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

    #179809 Reply
     tintin 
    Participant
    Status: Spouse
    Posts: 20
    Joined: 01/07/2019

    @chadcfp, I just looked at our 529 investment expenses online using your link and we have been paying over 2% AUM on all of the investments. The interesting thing is that the statements do not list the AUM fee or amount anywhere.

     

    There is small print at bottom of statements that “Fees have been or will be paid to your financial advisor’s firm in connection with the purchase of units. The source and amount of these fees will be provided to you upon written request“!

    When I called John Hancock and asked them why fee that is being charged every year is not listed in the statements, they said that it is disclosed in the plan disclosure document! We need to read it. When asked about ER, he pointed us to the same link you sent to us and asked us to find it ourselves. So much for the customer service …

    I do not understand how this is even legal – where is the disclosure to the client?

    I am going to open a 529 with Vanguard today and move all the funds. We have practically not made anything in last 3 years since we opened the account.

     

     

    #179811 Reply
    ChadCFP ChadCFP 
    Participant
    Status: Financial Advisor, Website Sponsor, Small Business Owner
    Posts: 60
    Joined: 10/04/2017

    @chadcfp, I just looked at our 529 investment expenses online using your link and we have been paying over 2% AUM on all of the investments. The interesting thing is that the statements do not list the AUM fee or amount anywhere.

     

    There is small print at bottom of statements that “Fees have been or will be paid to your financial advisor’s firm in connection with the purchase of units. The source and amount of these fees will be provided to you upon written request“!

    When I called John Hancock and asked them why fee that is being charged every year is not listed in the statements, they said that it is disclosed in the plan disclosure document! We need to read it. When asked about ER, he pointed us to the same link you sent to us and asked us to find it ourselves. So much for the customer service …

    I do not understand how this is even legal – where is the disclosure to the client?

    I am going to open a 529 with Vanguard today and move all the funds. We have practically not made anything in last 3 years since we opened the account.

     

     

    Click to expand…

    Yea, unfortunately, that is par for the course in that world. Don’t show the fees, and when they ask to see them, lead them to the plan disclosures which is 80+ pages of technical jargon. Similar to me coming in for an illness and you saying, “Here are my medical books, give them a read and you’ll find the illness somewhere.” I promise there are good advisors out there, but you have had a rough go. Now you see why the WCI always says there is no such thing as “free” financial planning, and when it is described as that, your “free” is usually hidden in those 80+ pages of disclosures with shady commissions.

    Since you seem to be taking charge today, probably not a bad idea to open both a 529 plan and an IRA at Vanguard for your wife. It looks like most of the 529 plan portfolios at Vanguard come in at an all-in-cost of .15% which saves you 1.85%/yr in fees plus the ~5.0% upfront sales charge. For your wife’s allocation, you can use the online Vanguard fund questionnaire to help with the allocation if you need help. You can use their response and look for a Target Date fund to match.

    As the others said, don’t beat yourself up, this stuff happens all the time. Great job addressing the issue and fixing it for you and your family!

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

    #179864 Reply
     Dicast 
    Participant
    Status: Physician
    Posts: 392
    Joined: 01/09/2016

    Hey I know someone who is in the almost same situation.  I have tried bringing this up to her but it falls on deaf ears.  Does anyone have any particularly good posts or other material I can use to help further explain why loaded funds are bad?

    Click to expand…

    I’ve frequently pointed people to an old vanguard blog post/chart. You can find it on bogleheads or the wayback machine. I use this to show the effects of expense ratios and AUM fees. I’ve been unsuccessfully trying to pry my parents away from Ed Jones for years. Just lately I found out my grandmother and another uncle also have accounts with the same guy. I figure it is costing my parents at least 15-20k a year more to stay where they are vs vanguard.

    Get outside of your bubble.

    #179869 Reply
    ChadCFP ChadCFP 
    Participant
    Status: Financial Advisor, Website Sponsor, Small Business Owner
    Posts: 60
    Joined: 10/04/2017

    Hey I know someone who is in the almost same situation.  I have tried bringing this up to her but it falls on deaf ears.  Does anyone have any particularly good posts or other material I can use to help further explain why loaded funds are bad?

    Click to expand…

    I’ve frequently pointed people to an old vanguard blog post/chart. You can find it on bogleheads or the wayback machine. I use this to show the effects of expense ratios and AUM fees. I’ve been unsuccessfully trying to pry my parents away from Ed Jones for years. Just lately I found out my grandmother and another uncle also have accounts with the same guy. I figure it is costing my parents at least 15-20k a year more to stay where they are vs vanguard.

    Click to expand…

    At a certain point, the numbers just don’t matter or have an effect anymore and the psychological side takes over (scared to move, fear of the unknown, friend and/or community members, etc.). From the advisor side, we have shown countless prospects that they are paying $XX,XXX in fees (hidden commissions or even high AUM). When we ask them what financial planning they receive they say annual reviews on their portfolios but nothing else (aka no true financial planning). Then again, maybe they just didn’t like us but sometimes the high fees, even when brought to their attention, don’t outweigh the psychological side.

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

    #179872 Reply
    Liked by Dicast
     tintin 
    Participant
    Status: Spouse
    Posts: 20
    Joined: 01/07/2019

    @chadcfp, can 529 funds be used for medical school (if kids decide to go down this route), graduate school etc. or can you only pay for 4 year college after high school?

     

    #179881 Reply
     G 
    Participant
    Status: Physician, Small Business Owner
    Posts: 1248
    Joined: 01/08/2016

    You can use 529 for grad/med school.

    #179885 Reply
    Liked by ChadCFP, tintin
    ChadCFP ChadCFP 
    Participant
    Status: Financial Advisor, Website Sponsor, Small Business Owner
    Posts: 60
    Joined: 10/04/2017

    @chadcfp, can 529 funds be used for medical school (if kids decide to go down this route), graduate school etc. or can you only pay for 4 year college after high school?

     

    Click to expand…

    Yep, graduate school and medical school are covered. You can also use $10,000/year for K-12 education now.

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

    #179889 Reply

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