My husband and I recently met with a financial planner from Edward Jones. We have $100K to invest but don’t know where to start. We’re not risk takers and approaching 50. He suggested first thing we do is each put $5500 in Roth IRAs for 2014 and then again in 2015. This would leave $78K for investing. For giving him $100K to invest, he says he’ll charge 3% off the top then 0.25% per quarter going forward. Are these charges on the level? Please advise. Thank you.
Terry Says: I would say they are “levelly” pretty high!! You can get the same advice for free at Fidelit or Vanguard — and there you will pay less than half of one percent annually to invest! Click here to see Fidelity’s investment advice service, for example. Edward Jones is a fine firm, but paying a 3% fee off the top and then 1% a year will really make a dent in your investment returns!
The advice about Roth IRAs is good (if you qualify based on income), but this is part of your investable funds — and should be considered as part of your total investing picture. And you’ll want to keep some money on the side — “chicken money” — for emergencies. So your investment decisions need to be part of an overall plan that includes the “big picture” of your present as well as your future goals. Do you have a current “estate plan” — a will, or better yet a revocable living trust? Do you have children, and if so do you have adequate life insurance and have you set up the appropriate beneficiary in case your children are still minors?
These are all questions a financial planner would ask. And you might want to do your investing at a place like Fidelity but get a one-time meeting with a fee-only financial planner (www.feeonly.org to search). Or just consult an estate planning attorney if you are covered on the other issues I mentioned. Don’t be overwhelmed — but then again, don’t pay more than necessary to get good advice.