You’re Probably Getting Screwed By Edward Jones Fees
Do you invest with Edward Jones? If so, take a look at their fee structure. You might discover, as I did, that you’re getting screwed by Edward Jones fees and their brokerage service as a whole. Between lies of omission and pursuits of commissions, your best interests are not always your broker’s top priority. Let’s take a look at the cost of the Roth IRA fees in my Edward Jones account and how I came to discover them on my path to figuring out my personal finances.
This is not investment advice, but merely my own experience with Edward Jones’ services. If you are invested with Edward Jones, this is not meant to cause you great concern. You are still in better shape than most simply by investing. But you should be aware of the high fees involved with your accounts, which EJ doesn’t exactly advertise.
Getting screwed by Edward Jones fees in my Roth IRA
Upon turning 18, I made my first adult decision and asked my parents about opening a Roth IRA. I took my modest fortune of $4,000 to my parents’ “financial advisor.” Pretty sophisticated stuff for an 18-year-old with no investing knowledge, long before the existence of books like I Will Teach You To Be Rich and The Simple Path to Wealth.
Knowing nothing about money, I assumed I was handing my hard-earned income over to the most capable and reputable folks in the business. Me, with a financial advisor. How do you like that? I was well on my way to becoming a responsible adult.
Fast forward about a decade. After college, I finally had an extremely modest income coming in. More importantly, I actually had a small amount left over that I could consider investing in that nearly forgotten Roth IRA. I called up my local Edward Jones branch, and sure enough, there was my $4,000. And not a whole lot more.
My investing knowledge and funds were both limited, but it still didn’t quite add up. Shouldn’t that investment have increased a little bit more? Isn’t that the point of investing money? Assuming the market returns of the nearly decades-long time that passed, my portfolio should have landed somewhere in the neighborhood $7,000 through the power of compound interest. And that’s without even contributing another dime to that account. That would be nearly double my original investment. Instead, I had just over $5,000 after 10 years in the market.
Vanguard vs. Edward Jones Fees comparison
I didn’t know much about investing, but at this point I knew I had to learn. And boy did I learn. I discovered that Edward Jones fees were eating away at my returns. I’d wager that these fees are screwing you over just the same. Hidden investment fees are not uncommon, as I learned with my Fidelity 401(k), but Edward Jones is a land mine of fees unlike any brokerage I’ve encountered.
Here are the five most common ways you might be getting screwed by Edward Jones broker fees.
Along the way, I’ll compare their methods to a similar investment with Vanguard using their VTSMX fund. VTSMX is the same thing as VTSAX, but for investors with fewer than $10,000. The expense ratio is slightly higher for VTSMX than VTSAX, but still very cheap relative to the competition.
1. Load fees (5.75%)
Right off the bat, Edward Jones hits me with a load fee on one of their American Funds offers. Load fees can work in three ways: before, during, or after. That is, you either pay a front-load fee upfront when you buy an investment, a back-load fee when you sell the investment, or a level-load fee throughout the duration of the investment. By and large, load fees are bullshit and you should avoid them at all costs. That’s specially true at the cost of 5.75% that I paid upfront.
Before my $4,000 investment even has a chance, I’m out $230. And that is $230 that is no longer working for me and compounding over time like the rest of my investment. Keep in mind, the more you invest in funds with a load fee, the more that 5.75% is worth.
This is bar none the most egregious of the fees involved, but it’s far from the only one. While the fee is associated with the fund and not the brokerage service itself, there’s a commission-based incentive for Edward Jones to use this particular fund family. Hey, that’s the American way.
VTSMX COMPARISON: No load fees of any kind. My $4,000 has $4,000 worth of buying power
2. Annual Fee ($40)
With VTSMX, the only fee you’ll pay is the very low expense ratio on the fund itself. Edward Jones’ mutual fund offerings will include higher expense ratios, but that’s the least of our concerns. We’ll touch on that later. First, we’ve got more unnecessary fees to add on first.
Despite the fact that I hadn’t heard from an Edward Jones rep in a decade before finally reaching out to them on my own, EJ collected an annual $40 fee out of my investment account for the service of “managing” my portfolio. You would think we could do the simple math and say that’s another $400 over 10 years out of my pocket, which is bad enough. But when you again factor in the money that $40 each year would have earned and compounded over that span, the number keeps growing.
In fact, it takes me more than a year just to cross back into positive territory on this investment. My $3,770 (following the load fee), gaining seven percent in the first year, comes to $4,033.90. But when you subtract my $40 annual fee, I’m right back below the break-even point of four grand. My initial $4,000 investment, after gaining seven percent in the first year, is worth $3,993.90. Not a great start!
VTSMX COMPARISON: No annual fee
3. Frequent Buying And Selling Of Investments For Commissions
Another common practice among brokerage houses is what is called “churning” accounts by frequently buying and selling investments (and gaining commissions). Instead of set-and-forget index funds like VTSMX, actively managed financial services companies have been known to hop in and out of various funds–at the expense of the client.
According to the Edward Jones equity commissions at the time, were they to flip my investment of $4,000 into a new fund (likely without informing me of this transaction) they would earn a 2.5% commission off of that money. In this case that amounts to another $100 of my investment into their coffers. If your investment included a back-load fee, you’ll of course have to pay that, too. This buy-and-sell process is one that Edward Jones has been in trouble for in the past.
If and when you are invested in a fund that is underperforming the market, as many funds do, it is not uncommon for an advisor at a financial institution to move you into something that has been outperforming the market. Sounds almost like a good strategy. But of course, past performance is no guarantee of future results. Your advisor may have just earned a nice commission and has some good news for you: that fund you’re now in is up X% year-to-date. Just don’t check your account statement, or you’ll discover that it’s actually gone X% down in the time that you’ve owned it.
VTSMX: No commission earned on transactions
4. Expense ratios above 0.50%
Let’s talk expense ratios. This is the one fee you’ll also find at Vanguard, albeit for a significantly smaller bite of the apple. Expense ratios of funds vary, but index funds that simply track the behavior of a particular sector or set of investments are generally the lower cost option. I’ll defer to JL Collins’ stock series or his excellent book, The Simple Path to Wealth, for a much better explanation than I can provide. But here’s the bottom line: funds that track the overall market typically have the lowest expense ratios. You simply set it and forget it. You may also consider a target date fund that rebalances your stock/bond allocation as you near your “target date” of retirement, which will include a slightly higher but still very manageable expense ratio. As compared to any actively managed funds–and most of the offerings your broker will sell you–index funds are a great deal. More often than not, passive management outperforms active management.
VTSMX has an expense ratio of just 0.14%. Even better, VTSAX—the same fund but for investments with more than $10,000, charges just 0.04% in an expense ratio. When reviewing fund options, you’ll see many expense ratios in the 0.50% to 0.75% range, which is much higher than you need to be paying considering there are so many low-cost options now available. Anything over one percent is purely criminal. Cutting down on these expense ratios is one of the easiest ways to optimize your investments.
The damaging impact of high expense ratios
My American Funds investment carried a 0.59% fee, which is actually on the low end of their offerings. Their international stock fund, for example, charges a full 1%. For perspective, the aforementioned $40 annual fee on my initial $4,000 investment is equivalent to a 1% expense ratio. The 0.59% annual expense ratio amounts to $23.60 out of that $4,000, but that amount will only grow as the account does, while the $40 flat fee will make up less of a percentage of my overall account—provided my account actually does grow. The more you have in your account, the more that seemingly innocent 0.59% wreaks havoc. Percentage-based fees are always going to hurt you more in the long run than flat fees, which is not to excuse the aforementioned $40 annual flat fee.
Take that 0.59% expense ratio and subtract what I would be paying for VTSMX (0.14%). I’m paying 0.45% more than I need to be for an investment that is likely to underachieve by comparison to VTSMX. Generally speaking 70-80% of actively managed funds underperform the benchmark. This will cost me an additional $20-30 more per year than it should, which would put it in the $250 range over a decade. Once your Vanguard account crosses that $10,000 mark, you’ll pay just 0.04%, widening the expense ratio gap even further.
More than likely, the expense ratios in your funds via Edward Jones are too high. I’m guessing that your broker has probably never had a conversation with you about expense ratios, among many other things he or she has failed to educate you about. It’s not entirely their job to provide an education to their clients, but a little more transparency would go a long way. Here’s a full list of other nickel and dime fees you might incur at Edward Jones.
VTSMX COMPARISON: Expense ratio of 0.14% percent (or 0.04% for VTSAX)
5. Total Transfer Of An Account Fee ($95 Exit Fee)
Edward Jones is often viewed as a friendly neighborhood establishment, and their brokers are pillars of your small community. It could be a trusted family friend or distant relative, or maybe someone from an upstanding family in your town. When you sit down and have a look at all the ways in which they’re profiting off of your investments, it can feel like a betrayal. To help smooth out the awkwardness you might feel in switching brokers, they’ll get you one more time on the way out the door with a $95 “total transfer of an account” fee.
Hard to blame them for this one. The jig is up, so they might as well squeeze one last drop out of that lemon. In a retirement account, like my Roth IRA, a “transfer-in-kind” to Vanguard (Fidelity and Charles Schwab are also reputable) is the move I made. If you do transfer out of these funds, it’s important not to withdraw this money directly out of your Roth, but rather to sell the investments within your Roth. You would then transfer the account to Vanguard or the brokerage of your choosing and purchase a low-cost index fund like VTSMX/VTSAX. Vanguard walked me through this over the phone, but you could also follow the steps on their website.
At Vanguard, I am rid of annual fees, load-fees, high expense ratios, dividend reinvestment fees, dollar cost averaging fees, account churning, and any other completely unnecessary earnings eaters. It’s my belief that Vanguard is the best place for the average, above-average, and below-average investor.
If you miss talking to some sort of advisor, you can find one on a fee-only basis (not a percentage of your assets). In other words, go with someone who charges say, $200 as opposed to 1% of your investment account.
The cost of being screwed by Edward Jones fees
Actively managed funds very rarely outperform the stock market as a whole. Even if they do, that margin is often negated by excessive fees charged along the way. Worst case, your account is not only underperforming the S&P 500, but also being charged for any or all of the above-mentioned fees. Underperformance ain’t cheap!
Edward Jones’ company slogan claims that they are “Making Sense of Investing.” They sell their clients with a friendly spiel of “Hey don’t worry, we’ll figure out all this financial mumbo-jumbo so you don’t have to worry about.” That’s what they’re doing: selling. Oftentimes, these are sales reps, not financial advisors. They’ll tell you exactly what you want to hear.
If you’re comfortable with what you’re getting from Edward Jones, so be it. Like I said, you are still invested, and that’s the most important thing. You might not want to go through with the hassle of switching accounts. Or you don’t want to ruin a relationship with a close friend or even family member. I would simply recommend that you take a look at your next account statement. How many different funds are you in? What are the expense ratios on those funds? Do they charge load fees?
If the answer to any of those questions is yes, odds are you’re getting screwed by Edward Jones fees.
I have a lot of family & friends that are into the Stock Market, IRA’S, Bonds, Money Market Accounts, etc… My ex-boyfriend received a inheritance between 2000-2002 & he decided to invest $300,000 of his own money into the stock market for about 5 years total from 2003-2008, but made the mistake of choosing Edward Jones as a partner & teacher for knowledge, tips, & help. My ex-boyfriend had never done the stock market before or worked with a broker. Edward Jones took advantage of him & while I was listening to one of their appointments together to talk to Edward Jones on why he had lost $150,000 & its still dropping. He didn’t do anything to show him what to do. All he did was keep saying just DON’T PULL ANY MONEY OUT & BE PATIENT. We left & I told my Ex-boyfriend to get out of the market before you have nothing left. He finally listened to me & right bf the housing market shut down around 2008-2009. My ex pulled out the $87,000 left out of the $300,000 he started with. I never wanted him to put his money in the stock market. I told my ex-boyfriend to buy GOLD instead. At the time, he didn’t want to listen to me, but he told me a few years later that he was glad he pulled out his money when he did or else he wouldn’t have any money left to pull out and he pulled his stocks because of what Edward Jones charges you to get advice, as well as The Housing market collapse.
I’m sorry to hear this, Barbie. It’s regrettable that you didn’t get more instruction from your broker throughout that process. I’m not sure what funds they had your funds invested in but, while the market crashed in 2008, those losses far exceed even the worst of the market conditions during that tumultuous time. The 2010s were a profitable time to be invested in the general stock market–I hope he wasn’t scared off entirely by the market! Long term (longer than five years), you are all but guaranteed to make money by investing in low cost index funds that track the overall stock market.
I was with ML after Mom passed few years ago, inherited part of her portfolio, my broker or fiduciary was never around when I needed to discuss a buy or trade, like for a week or more, I bought up GameStop at one time few yrs before it hit the moon… anyway I wanted an available advisor so I talked to my EJ guy down the street, I should of shopped around bit more, fees were not discussed in detail at all and I wasn’t so knowledgeable in finance but I knew when Ford was at $6, it’s Ford, not going to close up, it would jump when the Bronco and Lightning rolled out in 10 months and it did. Could of grossed 60K, he blew me off and wanted me to invest in 2 real estate rentals that have flatlined. He’s all into dividends, I’m into buy low sell high when possible. I’m now giving my fees a good look…he wanted to come to my house, called me after hours before I transferred over. Feel like I was sold a used car.
i too was almost screwed by Edward Jones
my father died in 1996. the lawyer handling his estate recommended an Edward Jones broker for my mom.
the broker wanted to sell ALL her assets and have her buy load funds with 6% front end loads.
What????
Edward Jones is a scam. they prey on desperate people. Stay far far away from Edward Jones.
I am an 85 year old Air Force veteran. My wife and I are debt free. We had $70,000 in savings. I invested it with Edward jones. From the end of December 2021 to 11/04/2022
that dwindled to $55,000. I closed my account. I have no idea where that money went.
Hey Gene–thank you for your service! Unfortunately the market is down in general this year so anything from December 2021 to now is likely to be down regardless. I take issue with the fees associated with Edward Jones that eat away at returns in the long run, but those fees are pretty minimal relative to the YTD market losses. Enjoy retirement and happy holidays!
Comparing any full service brokerage to Vanguard on fees alone, Vanguards self service model will win all the time. The value you personally receive from any advisor should out weigh the cost. If that’s not true in your situation then leave. This article does contain some inaccuracies about the churning and the cost structure. Firstly, most advisors wouldn’t take a $4,000 account.
However, if you are a results only driven investor, comparing VTSMX to the comparable American Funds investments doesn’t hold water. American Funds have a higher sharpe ratio in almost all scenarios. Furthermore, during a tough market like today, active manager have a real opportunity to out performance passive. VTSMX -18.1% YTD, AWSHX – 8.58 YTD.
I can see why this is such a popular article. Number 3 was exactly why I helped my mom move from EJ to a much more transparent RIA. You made a balanced argument against EJ without bias or vitriol. Kudos to you for sharing this.
Thanks for the kind words! I must have struck a nerve with this one as it is far more read/commented than anything else on this here site haha. Good to know that others had similar experiences. Feeling like you’re getting a raw deal can be the loneliest place on Earth, but clearly I am not alone in that with regards to my EJ experience.
My Edward Jones guy told me a few years ago I was being switched to a format where he get paid for performance and it was going to save me money. Down 15% this year and paying higher “program fees”. Just switched to Vanguard.
Is TDameritrade reputable? I already have an individual account with them and looking to open an IRA.
TD Ameritrade is a reputable brokerage service. I can’t speak to any of their full-service broker offerings and fees but certainly the company is reputable and on par with Fidelity/Vanguard/Schwab.
Holy cow, the number of *people* defending EJ here is …probably a good testament to how entrenched they are in our society!
IF, do find same IP of some of the commentators on here? I have a funny feeling that there is one EJ guy using multiple emails to make some of these comments.
Anyway, good article and glad you could move your investment over!
Haha there have been a few suspiciously similar comments, now that you mention it! I think it’s also natural for people who are invested with EJ to defend their own investments, especially when their accounts have grown over time. Being invested is the most important thing, period. But certainly not the most efficient way to go!
Bingo
I was originally with Merrill lynch then I realized I could do better with fund manager in fla had a lot of fidelity funds they were advisor funds did well even with high fees because of advisor loads then he merged with Ameriprise funds that’s wher the problem began fees were high but he said if I paid extra half percent I would be regarded as a special account person red flag went up I had been also invested with vanguard for years after this I decided to switch all accounts over to vanguard peanuts for fees I wished I would have done this when I first started to invest yrs ago what people don’t seem to realize is up or down markets you still pay the high fees and that really adds up alan b
Thanks for the comment, Alan. You’re right about those fees–even with the market down 20+%, the fund managers are getting paid an extra percentage out of your pocket.
My go-to trusted Fiduciary Financial Podcast (and I’ve listen to many)
https://www.talkingrealmoney.com/
Once you get past the somewhat dated style and the bad jokes, it’s a true gold mine of unbiased info that exposes nearly daily, the pitfalls of a stacked dishonest industry, and gives clear free advice to all who seek.
It’s a buying day today – All funds are on sale.
Thanks for your great blog.
Awesome–thanks for the rec. Always looking for another financial podcast. I mostly binge listen to the Ritholtz stuff (Animal Spirits, Portfolio Rescue, The Compound) but none of it is hyper-focused on the fiduciary industry. I will definitely check that one out.
Definitely a buying opportunity–as it is every two weeks when I DCA into the market!
Appreciate the comments.
Lot of EJ shills on here.
I qualified finance 3yr degree (like CFP) in UK …been in US for 20 years now.
I pay it fwd by teaching young people how to avoid the dreadful ‘advice’ and the totally unsuitable proprietary loaded products pimped by people like EJones, Ameriprise, Goldman Sachs, Voya, Affinity brokerage models, Betterment, Thrivent, etc etc
The lo-cost investing environment in America today, is ONLY – Vanguard, Schwab and Fidelity.
All others are BS.
You’re welcome.
You said it better and more succinctly than my rambling post! Totally agree.
This article is full of ignorant information. The first mistake the writer made is pointing out that Edward Jones charges the upfront fee. In reality. It’s the mutual fund company, not the advisory firm. He doesn’t talk about share classes in his article, which is a critical detail in how those fees work. There’s too much other incorrect content to point out, or too much missing information to add in order to clear up the mistakes. Don’t base your decision to invest with Edward Jones on the lack this article offers. I’m not an Edward Jones advisor, I’m an advisor with and Edward Jones competitor. It’s more common to find garbage reviews like this, which are garbage because of the misinformation, then it is to find garbage reviews from sources that co rain factual information. Be very careful who you listen to.
Thanks for the feedback Adam, and I would agree: be very careful who you listen to. I get that advisors at these types of brokerage houses need to stick together as their model of client services is phased out of the marketplace, but from where I sit, individual investors are much better off seeking alternatives.
And yes, those front-load fees come from the mutual fund company American Funds… which Edward Jones invested my money into. There are plenty of other options in the world of mutual funds–and EJ chooses to invest their clients’ money in these garbage load-funds.
Ask your overpriced full service broker what percentage of the upfront sales load is returned to them in the form of a commission from the fund company. Also ask what they pocket quarterly while you are in the fund (12b-1 fees too). Sales loads, be they front load or when you sell, are generally never recovered from better fund performance. Do yourself a favor and RUN FAST AWAY from those peddlers pushing this sort of ‘investment’. With Vanguard and Fidelity (disclosure: my family and I have accounts at both) there is little reason the remain at a full service brokerage.
You get paid by Edward Jones, so you are going to defend him. I invested all my savings with him. My $70,000 dwindled to $55,000 in just over a year. 2021 to 2022.
Where did my money go?
Gene, everyone was down in 2022. Say what you want about Edward Jones, but they didn’t steal your money. Unfortunately you probably should have stayed in the market. You’d probably have more than your original cost basis at this point.
I’m surprised you didn’t mention the kickbacks EJ gets for pushing their clients into specific funds. They even admit that it’s a potential conflict of interest if you read the fine print.
https://www.edwardjones.com/revenuesharing
Hey, you are right on every count about this. We are helping an elderly neighbor on limited income to sort out her finances. She went to the “friendly/neighborhood” EJ advisor, who 1) charged her fees as you described on her extremely modest asset; 2) did not actually advise her and left her with a portfolio where 75% of her asset are tied up in three stocks – not three mutual funds, three SINGLE stocks. By the time she could liquidate and move to Vanguard, she has paid over $1,000 in transaction fees – which, by the way, are not showing up on her statement AT ALL! (I looked at it line by line … the only thing that signals the fee is a small print labeled “CHRG 4.5%” on the transaction. For the elderly, this is darn near predatory.
That sounds like an exceptionally bad advisor operating within an already broken model. I am sorry to hear that for your neighbor, but good on you for helping out Jane!
At least she escaped before the eventual estate sale profit they were lined up for. When my mother passed her assets were at EdwardJones. They pocketed over $2000 in commissions to liquidate the positions in her account and nailed us for nearly another $500 to split up her IRA. I cannot wait to get the assets away from them!
I do NOT work in the Investment Industry. I just a sales guy who understands this stuff. Most of what you say just sounds ignorant meaning lacking education or knowledge. Sound like you know a few things though. You blame EJ but you should be upset with the Mutual Fund Industry. The fees are not hidden! There are laws in place to bring to light the fee structures.
Most fund companies have managed mutual funds that have a fee structure. Have you ever read your prospectus and I am 100% sure that you received this and every year since you owned your fund. What fund was it exactly??? From what year to what year? This is not an Edward Jones only thing. A shares, B shares and C shares.
American Funds is one of the most respected fund companies. They are not high flying but they won’t kill you when the market goes to crap except in 2008.
A shares have a breakpoint structure. Lower Exp ratio and lowest cost of ownership over time compared to B and C shares. Those brokers that put people in B shares because they did not know how to justify their service did a disservice to their customers IMO.
$1-25K 5.75%
$25K-49K 5%
$50K-99K 4.5%
$100K-250K 3.50%
$250K-499K 2.50%
$500K-749K 2.0%
$750K-999K 1.50%
$1M +0%
Ther is more to this, but I am giving you a quick glance. B shares-No fee to get in, but if you take it out there is a graduated fee to get out of the fund family-high expense ratio
C Shares-No fee to get, but will cost to get out–higher exp ratios and will convert to A shares at year 8.
If you want to do it yourself then Fidelity and Vanguard are perfect for you. I have a Fidelity account and was reviewing some old funds that I’ve owned for 15 years that are non Fidelity. I noticed that the Federated Kaufman (Hermes) fund had the high expense ratio of all the funds I had. I decided to dig deeper and look at the performance. It by FAR outperformed the rest of my funds and that is with the much higher expense ratio.
Vanguard likes to tout it’s low fees. Vanguard fund-it’s an Sp500 fund which is on auto pilot. I better not be paying for NO management. You get what you pay for. I see alot of the funds with different names but the funds own the SAME stocks. Are you really diversified? Not really.
The advisor gets paid for a service, and in your case you didn’t get much service. I don’t know if I would be having meetings with a 20 year old kid to go over their retirement plans and goals. Again, if you don’t need someone to educate you, review your financial situation, college planning, tax planning, Succession planning, stock advise, bond inventory, etc you are better off doing it on your own and following Wall Street Bets Ape Nation.
Thanks for the comment, Johnny. Charging a young and dumb 18-year-old a 5.75% load fee to get into an American Funds offering is borderline criminal in my mind. It’s not necessarily their job to educate me, but I got the sense that commission structures were the basis for my investment choices. I am happy to set it on autopilot with a low-cost index fund, as you mention.
I’ve used Edward Jones for a little over 20 years, and have seen my portfolio grow from an initial contribution of about $22,000 to a little under $2,000,000. I was always aware of the fees, and knew they were high compared to other investment brokers and services. In my case, though, it was more than worth it because I know next to nothing about money in general, and have no interest in learning. All I want is a portfolio that will return about 7% a year, and with that I’ll have enough to retire with peace of mind. Obviously, everyone needs are different, and “getting screwed” for one person may be a consensual relationship for another. EJ has worked great for me, though.
Hey Doug–that’s great to hear! My big issue with my Edward Jones experience is that I wasn’t made aware of any of these fees upfront. Maybe it’s not their responsibility to educate me as a novice investor, but I felt taken advantage of when comparing their fee structure to competitors.
Ultimately though, consistent investing over a long period of time, like 20 years, will overcome any fees. Great work!
I think I had an advantage in that my first EJ agent was my mom’s cousin. He then referred me to my current one who I’ve been with for a while. I might have gotten a little bit more attention this way, but maybe not. Either way, it was the right move for me, but nothing is right for everyone.
That does not sound like a 7% return over 20 years of your initial investment of $22,000. You must have added to your account of over 1 to 1.5 million of your own money during that period of time.
It is a 25.3% average annual return sustained over 20yr. This is highly unlikely, especially if you start with a mutual fund that has an upfront sales load. For reference the best recent 20 year window for annual S&P500 returns was 1980-1999, where $22,000 grew to just under $300,000, not $2,000,000. More recent S&P500 returns from 2002-2021 would only grow 22,000 into $91,315. Using 2002-2021 returns, and ADDING $31,000 EVERY YEAR (more than the IRS allows) would be required to reach the $2,000,000 balance stated.
Just transferred a 20 year EJ Roth account over to Fidelity. I did the “transfer in kind” and was a bit surprised to see that partial shares as a result of reinvested dividends did not transfer. When I phoned the advisor to ask about it, he said it was likely closing fees. I told him that those fees were itemized on the statement. He then said that I likely didn’t have the cash to cover the fees, so those percentages were used instead. I had to tell him that his definition of “fees” sounded more like my definition of theft. Still waiting for his return call with explanation…
Interesting–keep us posted! That sounds similar to $95 “exit fee” that I paid.
Edward Jones certainly isn’t for everyone! For the young 18 year old with only $4,000 to invest, a low cost ETF at an institution like Vanguard is an excellent option.
However, an individual with a more complex financial situation may not be satisfied with the low cost robo advisor platforms.
Take it from a 65 year old that has accumulated several million in assets. I’m faced with creating a tax-efficient income stream and maintaining an appropriate portfolio balance all while taking into account my real estate income, social security benefits, and military pension.
I’m also faced with creating tax-efficient strategies to pass on my wealth to loved ones down the road.
Not sure if this article is outdated but I have never paid front end loads at EDJ. My advisor charges me a wrap fee of less than 1% for his advisory services. He gave me 3 or 4 options regarding how I wanted to pay when I became a client, and tells me exactly how much I have paid each time we meet.
My EDJ assets have nearly tripled over the last 10 years or so, and I’m more than happy to pay my advisor to take that work off my plate.
I’m sorry you had a negative experience with them! Perhaps your advisor was not as transparent and helpful as mine.
Thanks for your feedback–you are correct that the transparency of the advisor can vary from branch to branch, though generally speaking I find some of their fees to be egregious either way. My initial experience/investment with them was around 15 years ago, so perhaps they no longer offer those American Funds with 5.75% load fees (or at least your advisor didn’t pile you into them). For people who want a hands off approach, I still think a target date fund at Vanguard solves the matter more efficiently. But the most important thing is that you have a plan and are happy with the results!
Nope, they are still selling those American Funds Mutuals with the 5.75% upfront load fees. Just transferred someone away from those thieves.
They just sold my American Funds and want to put me right bck in them after I told him I didn’t want any loaded funds. He also attempted to slam me against my express wishes into fee based account. I’m retired.
You must be an Edward Jones advisor. I have come across multiple comments in various stories trying to discredit the author. I have found Edward Jones Advisors to be liars and thieves. Look up Edward Jones and Lawsuits.
Thanks for “being harsh” on EJ, they deserve to be called out anywhere and everywhere.
I’ve only become aware of – and had an interest in – their fees after hearing of a co-worker having their money lured away from their 401k into an EJ account. Long story short, this co-worker’s husband knew an upperclassman in college who came back to visit after graduation and getting a job at EJ … and got their entire social circle to sign up with them. Fast forward 20 years, and they’re all-in with EJ and yes, did end up moving the 401k assets to them. I attempted to steer my co-worker clear but was unsuccessful.
I am and have been a Vanguard S&P 500 investor for life. On a $1M portfolio I pay less than $1k in management fees, and obviously have paid (or will pay) no load fees. What Edward Jones is doing is arguably criminal. Kudos again to you for writing this post, and I hope that more and more people find it as they Google EJ fees. Stay safe – watch your back with the local EJ henchmen out and about (this kind of education is highly detrimental to their crooked business).
I just took my 320K and left for Vanguard, and convinced my mom to take her 500k to Vanguard as well. Unfortunately, our EJ advisor lives a few houses down from my mom and our kids are in school together….But several hundred thousand in thirty years? Pshh.
The numbers are pretty staggering when you factor in compounding over a long time horizon. It’s incredibly common for the local EJ advisor to be someone you know in the community, but I don’t think avoiding the inevitable awkwardness should be the reason to continue to pay that community member a percentage of your assets every year. It’s YOUR money!
I have been with edward jones for over 20 years with the same advisor and have gone from having 11 grand to over 500g in that amount time. 10 year annualized return of 14 percent.
First its your money and as diligent investor you should always know all fees you are paying when you work with a financial rep or advisor to begin. If you don’t then shame on you for not doing your homework before doing business with them. Second when you fail to educate yourself about where you are putting your money and find out that there are fees years later that’s your own doing, not Edward Jones. Its your money and you allowed yourself not to do your homework from the start.
In any and every financial firm you have good people and not so good and its your responsibility to find out all information Bouton their fees and not to depend upon that person to share. Your giving away your money when. You do not ask all the appropriate questions before doing business.
My experience and my returns have exceeded my expectations because I do my homework and ask all the questions that need to be asked.
Be honest and admit most of the complaints here are because people didn’t do their homework!
Haha you are right that not doing my homework was part of my problem! I was young and didn’t even know what doing my homework even entailed. My frustration with Edward Jones was the lack of transparency about their fees, but being invested in equities over the last 10 years has worked out very well for everyone involved, fees or not.
Over time, it bothers me for my investments not to be optimized with low-cost fees, but you are right that I just didn’t know any better at the time.
I enjoyed your blunt information and you are lucky to have learned the finance game early in life. E J is a business not your close friend. Many companies model this practice or worse. Merrill Lynch killed us with fees and churning.
Most 401k invested by your employer are painful to look at when it comes to fees
Everyone should hold employers accountable for the “choices” you are given to invest in. Good luck out there, it’s like swimming with sharks and you are bleeding money.
Thank you Susan, and you are right–it was an early enough lesson. Swimming with the sharks and bleeding money is a perfect analogy. The reality is that these fees won’t prevent us from retiring–the habit of saving money and the power of compound interest will overcome an unnecessary 1% fee. That said, once you know about compound interest, you’re acutely aware of how much that 1% can hurt you in the long run.
I’m a little confused. This article states that a 1% fee is expected for someone with over a million dollars invested. But this comment is referring to it as “an unnecessary 1% fee”. I just meet with a financial advisor today and he said his charge is 1%. I just want to make sure I’m not being taken advantage of. I currently have all of my investments with EJ and have for about 10 years
Hey Shana–I’m not sure which article you are referring to in regards to the 1% fee for someone with over one million. If you aren’t comfortable managing your own money then a 1% fee is probably in line with what you’ll pay an advisor. On a million dollar portfolio, that’s $10,000 annually to your broker (and more as the money grows). For me, I would consider that a VERY steep price to pay. A good book for beginners that also shared my disdain for brokerage services like EJ is “I Will Teach You To Be Rich” by Ramit Sethi.
I’m sorry, but ‘buyer beware’ is a really crappy excuse for defending this kind of behavior. Sure, an educated customer is always helpful. Same thing with your mechanic, electrician, real estate agent, etc.
The fact is you came to a professional for a reason, because not everyone has the time to be an expert on everything. Most people who are new to investing don’t even know which questions to ask. With a limited income and only one shot at getting retirement right, most don’t have the luxury of ‘shopping around’ until they get it right, and as a result have no means for comparison. For all they know, EJ’s fees are completely normal.
So no, ‘buyer beware’ is not a valid excuse for sketchy business practices.
OK, that makes me feel better about being a little hard on EJ. I didn’t want to give people the wrong impression that they made a huge mistake by putting their money with Edward Jones. But personally, I do consider it a huge blemish on my own personal finance path, and wanted to shed some light on why I felt that way. And for all the reasons you mention, I don’t want to let them off the hook.
Not sure that I believe any of the figures here.
For anybody reading this, actually do your homework – compare Vanguard and EJ, say – and you won’t end up at EJ, trust me. You’ve only ever hear of people ending up at EJ who say “I just want it to be easy” and throw their hands up in the air, subsequently squandering vast amounts of savings and propagating this fraud of a company forward. These same people also tend to be very defensive of their (ignorant) choice to “go the easy route”, probably because they have realized since investing with EJ that they can’t even “get out” without paying high fees or trailing loads.
Thank you so much for sharing your experience. Sadly I have been with EJ for decades so I will not be sleeping tonight. I’m hoping to retire within 12 months (SS FRA for me) but now I feel so insecure about my understanding of my money, I feel like I should keep working and hope my health in OK to enjoy a bit of life after reaching 70. I’m making appointments with new financial advisors tomorrow.
Again, many thanks.
PS: In all fairness to EJ, when I asked several years back exactly what % I paid in fees, the response was
“You don’t want to know.” I can’t say I wasn’t warned, just to stunned to react or comprehend.
Hey Kim–I hate the thought of you losing sleep! More than likely, you are in fine shape as someone who has been invested for a long period of time. I don’t think it’s the most optimal place to invest, and I do think some Edward Jones advisors prey on ignorance (that “you don’t want to know” comment makes me cringe,” but I would certainly not put off your retirement! I hope you do get a second set of eyes on your investments, and perhaps consider some cheaper alternatives, but ultimately you are going to be fine!
Call Vanguard and let them transfer your money out. You can pay .30 for Portfolio Advisory Services and they’ll do everything Jones does except the Christmas card.
Thank you for mentioning that option, which I neglected. Probably easier than going cold turkey to no advisor at all. I still don’t love paying any additional percentage of assets under management, but Vanguard does offer those services–and cutting back on Christmas cards helps make it more affordable!
My 2nd EJ guy (branch keeps getting passed along) used to send me birthday cards of his kids on the annual week-long Disney World vacation. As a frequent vacationer at WDW I know how much a weeks stay at WDW costs. That this guy had the audacity to send me a card of his kids in the WDW stockade from a vacation they took each year just galled me!
Ha! Now that’s a power play. It should have been a thank you card!
Don’t forget the Thanksgiving pie!
I feel the same. Been w/EJ 2 years since transferring my old employers 401(k) to traditional Ira with EJ. My 240k after two years is only 250k and my broker claims I am performing at over 8%.
I’m not real savvy with Investments, but I definitely need to find a trustworthy broker since I have no pension, haven’t worked in 20 years and this is all I have going for me. I feel your pain.
I opened a rollover IRA and new Roth account at EJ 19 years ago. Back then I knew nothing about all their fees although I was aware of their sales commission and annual fee. I was not aware of Vanguard being open to solitary investers.
The EJ fee structure is very well hidden and very hard to find. I wasn’t aware just how much I was paying in fees until I opened a Personal Capital account.
Thanks for stopping by, Lynne. The whole point of having someone manage your money is to help you better understand what’s going on with it and why, and those lies of omission from the broker (not being upfront regarding load fees & expense ratios) lead to a lot of resentment once you find out what those fees have cost in compounding growth. Glad you opened that Personal Capital account!
I’m having a headache and belly ache reading this. I have $600K of Traditional and Roth IRA in EJ since 2013. I am currently employed in Federal Govt and have $200K in TSP in over 5 years. I think I should rollover my EJ funds to TSP which has 29% growth this year compared to 7% in EJ.
I wouldn’t be too hard on yourself–it looks like you’ve accumulated significant assets, fees or not! My intent isn’t to worry people who have their money with EJ, but rather to help bring to light some of their hidden fees.
I wouldn’t make any decisions based solely on this year’s returns. Without knowing what you’re invested in between those two accounts, I can’t offer much in the way of guidance (and I wouldn’t anyway since I am just some random blogger haha). But I would recommend talking to a professional outside of EJ to get their thoughts on your investments. Best of luck–you’re in great shape!