Your IRA Provider

SandburRanch · Aug 12, 2015

Have you ever fired your IRA provider. Reasons Ok, company names please withhold.

sseelhoff · Aug 12, 2015

SandburRanch said:
Have you ever fired your IRA provider. Reasons Ok, company names please withhold.

Yes. We recently (within the last year) fired our broker after 20 years. No growth in the account over that time. Lots of excuses and all of our gains went to his fees. Should have fired him sooner, but it was a friend of the family kind of deal. Since the move, we have made more gains than we had the entire time we were with our prior broker.

smstonypoint · Aug 12, 2015

No, but I direct my own investments through a low-cost provider.

Are you using a broker to direct your investments?

Steve

gsganzer · Aug 12, 2015

sseelhoff said:
Yes. We recently (within the last year) fired our broker after 20 years. No growth in the account over that time. Lots of excuses and all of our gains went to his fees. Should have fired him sooner, but it was a friend of the family kind of deal. Since the move, we have made more gains than we had the entire time we were with our prior broker.

I'm about to fire our broker too, after being with him for 7 years. I get transaction notices frequently and I'm told that he's "level setting" the allocations. I get the feeling that he's "pushing paper" and piling up fee's.

I'm thinking of moving everything to Vanguard. In reality, most of these companies have an automated allocation system that looks at your investment strategy and then recommends the mix of investments to meet those goals. I'm not sure that the actual broker does much research to add any real value.

One thing I will add:
I'm not one for additional governmental regulation, but I would definitely push for a law that provides better transparency for fee's charged for brokerage transactions. I think it's deliberately designed to be cryptic and confusing. I shouldn't have to dig up a prospectus I received years/months ago to see what the particular fee will be for trading that particular stock.

My Dad was a broker for 30+ years. After he retired, he ultimately moved all his investments to Vanguard and had very little involvement in the actual stock picks. He let their algorithm do the allocation based on his investment goals.

dmccarty · Aug 12, 2015

gsganzer said:
...
I'm thinking of moving everything to Vanguard. In reality, most of these companies have an automated allocation system that looks at your investment strategy and then recommends the mix of investments to meet those goals. I'm not sure that the actual broker does much research to add any real value.
....

I almost posted earlier but I was afraid what I was going to say would be taken wrong...

I don't understand why anyone would use a broker. The Wall Street Journal for years would ask financial people to forecast the market at the first of the year and at the end of the year they would look at the results. My dead dog could pick better and I think the research that has been done for decades backs this up. We don't own stock per say but in fund indexes that balance out the portfolio. The funds are in low fee investment firms. High fees really kill long term growth in a retirement fund. There should be plenty of examples on the web showing examples.

One of the investment companies has sent me a couple emails saying that our investments are aggressive for our age and we should reallocate. No, we should NOT. The company only knows about the funds IT holds, not our other investments. I don't let them allocate a danged thing. I make the decisions for better or worse. I have seen many people over the years PANIC when the market goes down and they SELL.

If they had not sold the stocks/funds, they would only have had a paper loss, but since they sold, they have a real loss. Even with the 2008 meltdown our funds popped back up quickly in value. Ho Hum.

I really don't see how most brokers can beat index fund performance and thus earn their fees. I have a spreadsheet that models what will likely happen to our retirement investments given various retirement ages, future investments in the funds, and how well the funds will perform at various rates. This ain't rocket science and we seem to be doing well saving out of each paycheck, over a long period of time, in low fee funds. We would be better off if we could have managed to save a bit more when we were younger, or even if we could save more today, but life does set some boundries in spite of the best laid plans of mice and men.

Later,
Dan

gsganzer · Aug 12, 2015

Dan, it sounds like you're already doing what we're planning when we move our assets to Vanguard or something similar.

My Dad said that when he was a broker, he was trying to get returns for his clients that at least matched the S&P 500. He said in his later years that he could have guaranteed that performance by just investing them in the S&P 500 :laughing:

WM75Guy · Aug 12, 2015

Yes, sorta did that. I moved everything out of BOA IRA CDs into mutual funds in a self directed Merrill Lynch brokerage account. The BOA CDs went to almost 0% interest. Merrill Lynch and BOA are in a partnership. The Merrill Lynch account is tied to my BOA account so moving money and seeing my balances is all from the same screen. I also move some old IRAs from previous employers that were in different brokerage firms into the same account to consolidate everything.

For stocks I use Computershare. Computershare and dividend reinvestment is not something you will hear about from a stockbroker as they get cut out of the deal, hence no commission. They handle stock ownership and dividend re-investment plans for many companies. You buy full or partial shares, usually for no fees, straight from the participating companies. You can do a dividend reinvestment to buy additional shares, set up monthly auto debit plans to buy shares, or do a one time purchase. Selling is a minimal fee, like $25 plus $0.12 per share.

Oaktree · Aug 12, 2015

sseelhoff said:
Yes. We recently (within the last year) fired our broker after 20 years. No growth in the account over that time. Lots of excuses and all of our gains went to his fees. Should have fired him sooner, but it was a friend of the family kind of deal. Since the move, we have made more gains than we had the entire time we were with our prior broker.

More or less same situation here (in my case it was about 2½ years ago), same reasons. When the market started coming back after the Great Recession®, my account didn't. Always had an excuse, but basically he'd put all my money into a few stocks that weren't going anywhere, and he had no intention of moving them. Moved my accounts to 2 different outfits...IRA in one, plain brokerage account to another.
Haven't hit a home run with every stock he's picked, but I've done much better than before. Fees are a lot less now too.

I'm more than a little leery of mutual funds...just haven't had very good luck with them.

300UGUY · Aug 12, 2015

I don't think anybody really needs a broker anymore, I invest on my own, thru Fidelity, Vanguard is also a good company. I think the whole broker thing is outdated, it belongs to the era of the ticker tape. I have a very low opinion of financial planners, most are simply trying to sell you something they can collect a commission on. I have mostly index funds. Trying to beat the market is maybe worse than going to a casino.