My brother-in-law sought my help with his financial planning and investing. I provided him with general information and basic education (you can see my earlier post seeking input on 'Guiding Principles' here: viewtopic.php?t=450553 ).
In short, he decided to follow the conventional wisdom I shared and informed his Edward Jones advisor that he's transferring his accounts (IRAs and Brokerage) to Schwab for better self-directed and other lower cost options.
His brokerage account, totaling approximately $1 million at EJ, consists ONLY of two blue-chip stocks he inherited a few years ago. This is the large majority of his total net worth. I've been advocating to him the virtues of diversification and index funds, which he plans to pursue at Schwab. My brother-in-law texted me yesterday to say he initiated the transfer and that his EJ advisor was 'not happy.' When I asked him what he said, he texted me the body of the email from the advisor. While I won't quote verbatim, I found the advisor's comments quite surprising, almost shocking. In summary:
- The advisor suggested my brother-in-law should have "stayed the course" with him by being invested in the two stocks, reinvesting dividends to create multiple tax lots. This strategy, which is what EJ has been encouraging him the last few years, would allow him to sell portions of the stocks without triggering substantial taxable gains and generate retirement income from growing dividends.
- "Abandoning" this approach, the advisor argued, means missing out on future wealth creation, insisting reinvesting dividends is the best strategy for him and his wife to secure their retirement.
- The advisor closed by emphasizing his dedication and passion to wealth management and always acting in his clients' best interests, but not before poking at my BIL by saying good luck with the tax bill when he sells the stocks.
I told my BIL that I found this advice borderline unethical for several reasons, and if anything reinforces why leaving EJ is undoubtedly the right move. EJ's focus on tax considerations without addressing the risks of being highly concentrated for someone less than 10yrs out from retirement almost strikes me as negligent. I can't help but wonder if aside from the AUM fees he's earning on the IRAs, the advisor benefited from commissions that the frequent reinvesting of dividends created. Regardless, I'm still somewhat shocked that any financial advisor would recommend maintaining high concentration in just two stocks and a dividend-centric approach as the primary retirement strategy for someone in this situation.
Do you think I'm overreacting to what I see as the absurdity of the EJ advisor's response?"
In short, he decided to follow the conventional wisdom I shared and informed his Edward Jones advisor that he's transferring his accounts (IRAs and Brokerage) to Schwab for better self-directed and other lower cost options.
His brokerage account, totaling approximately $1 million at EJ, consists ONLY of two blue-chip stocks he inherited a few years ago. This is the large majority of his total net worth. I've been advocating to him the virtues of diversification and index funds, which he plans to pursue at Schwab. My brother-in-law texted me yesterday to say he initiated the transfer and that his EJ advisor was 'not happy.' When I asked him what he said, he texted me the body of the email from the advisor. While I won't quote verbatim, I found the advisor's comments quite surprising, almost shocking. In summary:
- The advisor suggested my brother-in-law should have "stayed the course" with him by being invested in the two stocks, reinvesting dividends to create multiple tax lots. This strategy, which is what EJ has been encouraging him the last few years, would allow him to sell portions of the stocks without triggering substantial taxable gains and generate retirement income from growing dividends.
- "Abandoning" this approach, the advisor argued, means missing out on future wealth creation, insisting reinvesting dividends is the best strategy for him and his wife to secure their retirement.
- The advisor closed by emphasizing his dedication and passion to wealth management and always acting in his clients' best interests, but not before poking at my BIL by saying good luck with the tax bill when he sells the stocks.
I told my BIL that I found this advice borderline unethical for several reasons, and if anything reinforces why leaving EJ is undoubtedly the right move. EJ's focus on tax considerations without addressing the risks of being highly concentrated for someone less than 10yrs out from retirement almost strikes me as negligent. I can't help but wonder if aside from the AUM fees he's earning on the IRAs, the advisor benefited from commissions that the frequent reinvesting of dividends created. Regardless, I'm still somewhat shocked that any financial advisor would recommend maintaining high concentration in just two stocks and a dividend-centric approach as the primary retirement strategy for someone in this situation.
Do you think I'm overreacting to what I see as the absurdity of the EJ advisor's response?"
Statistics: Posted by Ace300 — Thu Mar 13, 2025 7:57 am — Replies 10 — Views 598
