My wife is a realtor so basically self employed. She has a SEP IRA for retirement. We got a call from our Edward Jones guy, who is a friend. He is suggesting moving her assets to a UMA.

I can find no info on this being a tax deferred retirement type account. The fees are about 1.2%, which is high as far as we are concerned (not sure what she pays in fees on the SEP).

Figured I'd ask the forum. My google hasn't given me much info. He was touting the returns in the last 3 months, but it wasn't really much different than our current accounts.

Hard pass. Ridiculous fees.

quote:

Originally posted by ZSMICHAEL:
Hard pass. Ridiculous fees.

That was my initial take on it.

If her sole retirement account is a SEP IRA holding the typical mix of securities (stocks, bonds, funds, etc), then I don't see any advantage to a UMA. If the SEP is currently self-directed (you pick out the investments) and you want to change to a managed account to have someone else pick the investments, then you can do that, but a UMA still seems like an unnecessary (and expensive) vehicle. You'd be better off just transferring the SEP to whatever institution you want to manage it. The UMAs are typically used by higher net worth individuals who want a managed account that covers a wider variety of asset classes than just a typical stock/bond/fund portfolio.

What does the Edward Jones guy get out of it?

quote:

Originally posted by 229DAK:
What does the Edward Jones guy get out of it?

A cut of the ridiculously high fees and/or a one-time commission for convincing them to move over into the pricey UMA.

There's no need to pay high fees on a basic IRA. Most brokerages have moved to zero fees for self-directed IRAs.

Based on the replies, I have to wonder how good a friend he is?

Unfortunately, that's what often happens with salesmen. When they're just starting out, or pickings are slim, they hit up their personal network of friends and family to try to earn some quick cash or make their metrics for the period.

And yes, many "financial advisors" are primarily salesmen. Especially those working for big firms or banks. They work for the firm, not for you, and their goal is to make money for the firm. Compare to independent/small shop fiduciary financial advisors, who work for you, and whose goal is what's best for you.

Edward Jones is famous for training their new brokers to hit up their friends. I have had a self directed SEP Ira for decades. I make all my investment decisons. I am free to chose my own stocks bonds and mutual funds. There are no fees for a self directed account.

He's between a friend and acquaintance. He wouldn't steer us to something that will lose us money, but he also has self interest where I wouldn't expect the best deal from him.

In any case we will stick with what we have. We are planning on retiring (semi) in a couple years. No need to rock the boat. Her account returns have been similar to my 401K returns.

EJ UMA's are better suited to taxable accounts. Advantage is they can better manage the capital gains that get kicked out (taxable) resulting in a lower tax bill.

Years ago I knew a guy in that business and it seems like a good way to find clients is to go over your friends list.

Their favorite expression, "if you can't make money off your friends, what do you need them for"?

That was all I needed to know about that business.

I'd go to the Fidelity or Vanguard site and read up on the various types of investments. Both have a lot of good literature to self educate a bit just so you know the right questions to ask.

My Google isn’t anything great but I easily found this link from investopedia. UMA

All it is is that any sort of investment account can be part of it, both tax deferred and taxable, retirement or not.

Under this umbrella account, your Edward’s guy can manage it for the 1.2% fee. It saves them the cost of managing multiple accounts and keeping track of the separate accounts.

Run away from this...

If you need help in managing your money or just need advise, find a fee-based financial planner who does not make money off of selling you junk.

My in-laws put all of their trust into Edward Jones and their retirement options. When the father-in-law passed, we convince the mother-in-law to speak with a fee-only planner (the one I use) and he saved her so much money it was ridiculous. He also made her some as well, but she was impressed more with the savings than him doubling her portfolio.

quote:

Originally posted by bozman:
Run away from this...

Yep. Friends don't let friends invest with Edward Jones.