How AI Legalese Decoder Can Simplify the Edward Jones vs. Fidelity or Schwab Legal Battle
- May 6, 2024
- Posted by: legaleseblogger
- Category: Related News
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## Current Financial Situation
We currently have 1.25 million dollars invested with Edward Jones in a variety of funds, bonds, and a High Yield Savings Account (HYSA). The reporting we see from the website makes it difficult to identify our true costs accurately. Despite having several accounts with several hundred thousand dollars, some show zero fees. While we trust our advisor, she sent a report claiming our total fees and commissions for the year were only $1200. This seems questionable given the reputation of Edward Jones for higher fees compared to other financial institutions.
## Considering a Change
We have historically trusted our advisor, but if our fees are truly only $1200, something doesn’t quite add up. This discrepancy has us considering a change, especially upon learning that Fidelity and Schwab offer lower fees. However, we are hesitant to move on from the stability and support of a personal advisor.
## How AI Legalese Decoder Can Help
The AI Legalese Decoder can assist in this situation by analyzing the fine print of your investment agreements and translating complicated legalese into plain language. This can help you understand the true costs associated with your investments at Edward Jones and compare them more accurately to the fees of other financial institutions like Fidelity and Schwab. By gaining a clearer understanding of your financial situation, you can make a more informed decision about whether it’s time to move on from your current advisor and explore other options.
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Check if you have a “select account” or a “guided solutions” account. Guided solutions should have a 1+% fee on it called “program fee”. It gets charged monthly. Select doesn’t have an aum fee but will charge you for every trade and will put you into higher expense ratio stuff. Both are suboptimal
Both Fidelity and Schwab have advisor services. With > $1M at Schwab you’d be assigned a free ‘Financial Consultant’ who would help with basic advising or be your gateway to whatever level of service you are looking for.
I’m not familiar with how Edward Jones reports things but its possible that $1200 is just account level fees. You should look at the Expense Ratios of the funds you are invested in. You usually wouldn’t see those fees directly in your account, they just reduce the value of the fund.
I have seen different statements from Edward Jones over the years and there are different account types. Some are based on assets under management (percentage fee) and others appear to be commission based.
If your advisor has you in a commission based account and is not making many trades then your cost could definitely be lower than a fee-based account. See if they can get you more info.
My other EJ observation is that I’ve encountered different advisors who operate their practice VERY differently. Some are great, some are terrible. You may very well have an advisor who made wise investments you can stick with and maintain low costs. Again, ask them for more info and find out HOW and WHEN you pay them.
Hi OP,
Full disclosure – I worked as a consultant at Fidelity, and I work at an RIA now which partners with Schwab through their SAN network. Happy to share thoughts as objectively as possible but to be transparent, I do have a clear bias towards Schwab.
Edward Jones: I have little knowledge on EJ other than a few interviews a long time ago (was not what I was looking for); clients were mostly self-sourced as to advisors building a client book and I understood their fees to be varied – where the advisor had some degree of discretion. EJ at the time told me that the goal was for advisors to have 350-500 clients, and asset amounts varied greatly from $100k and up.
Fidelity and Schwab both have tiers of services and these are among the largest investment institutions available. Their advisors are both referred to as Financial Consultants (FCs) and licensed accordingly.
Fidelity
There’s about 5 tiers of services ranging from a robo-advisor (FidGo) all the way to their Wealth-Advisory Solutions (WAS), where they tap among their network of outside RIA firms for the highest tier of services – that opens up around the $500k to $1M minimum AUM range for starting relationships. Not surprisingly, the cost for advisory and investment services ranges from ~0.35% to ~1.5% depending, and the ultra-high-net-worth clients – say $20M+ – often get steep discounts equating to sub-0.5% fees for AUM. Also on the WAS platform, each RIA has a different fee schedule but 1% is a typical starting fee. The quality and value of services will vary and scale up to “white glove services” when you get into the RIA space, though again each RIA is different so quality also varies. A good FC will recommend a good pairing based on your asset levels and specific needs/goals.
If you opt to just work with a Fidelity FC, the fee is around 0.75%-1.15% and they work with $250k asset minimums. You may also opt for cheaper where they don’t assign you a specific FC, and instead you go to a pool of FCs which may be based out of state (Colorado was a key hub). For a dedicated FC, that would be closer to 1% and the goal was 500:1 client-to-advisor ratio. I would not recommend a Fidelity FC if you want consistency; I had some clients complain on being moved 5+ times to different FCs in a few years time. Fidelity’s internal message – at the time – was also that they would love FCs to service 1000 clients per FC – I don’t know if this goal has changed. Side note – I really did like their platform, very easy to use and clean overall.
Charles Schwab
They also have tiers of service. Client-to-advisor ratio I’ve seen around 300-500:1, though many FCs float around the 350-400 range. They tend to tailor to $1M+ client assets minimums. Like Fidelity, they also have an internal offering called SWA – Schwab Wealth Advisory – and this cost is ~0.85% which gets a dedicated advisor. Like Fidelity, Schwab’s highest tier of services is also through RIAs, called the Schwab Advisor Network. For all intents and purposes, WAS at Fidelity is the same concept as SAN at Schwab and in fact some firms operate on both WAS and SAN. The reason for outside referrals is effectively recognizing that for highest tiers of service they needed to be able to pivot and leverage independent firms more capable of providing better quality financial planning, more customization, lower client/advisor ratios (often 100:1 maximums), higher quality tax planning, mitigation and complex strategies as needed, estate planning, and so on. Most – though not all – aim to be a one-stop-shop for their clients.
It’s worth noting that many services are still offered within Fidelity and Schwab, but often there’s limits (for example estate planning review, but not drafting docs – things like this).
Okay this probably went way too long. Hope this information helps.