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Ask HN: Getting out of a managed stock portfolio

3 pointsby jelanabout 3 years ago
Around 5 years ago I decided I would put some money in my bank &#x2F; brokerages managed fund program where your money is actively traded on your behalf for a small monthly fee (this fee ends up being about $150 - $200 a month)<p>The performance of this managed account over the past 5 years while doing well has never beat the returns of index funds that do not cost a monthly fee to invest in, so would now be a good time to sell in order to reinvest the funds outside of the managed fund?<p>Does anyone have opinions on what the best course of action would be here? I don’t really see a great way of getting out of this fund, either I sell when the market is doing well only to pay capital gains taxes and put the money right back into the market, or I sell now at a reduced gain, pay less tax to put it right back into the market, but get rid of the monthly fee.<p>The fee itself is not a major concern to me, but it just seems stupid to continue paying it when I’m not getting any large benefit even when the market is doing well and I’ve given it plenty of time to see if paying the fee somehow gets you better returns which is not the case

2 comments

faangiqabout 3 years ago
Now is always the best time.
prirunabout 3 years ago
I did a similar thing switching from Vanguard to Edward Jones and back to Vanguard. The first year at EJ was great, so I switched the rest of my money to them. Big mistake. While the market was going up, my EJ stuff was going down. I couldn&#x27;t handle it and switched everything back to Vanguard. I am okay with the overall market doing shitty, me included, but not okay with the market going up while I&#x27;m going down.<p>Anyway, here are some tips I learned:<p>1. You can transfer some investments &quot;in kind&quot;, meaning they just transfer. Other investments are proprietary to an investment company like EJ. Even if it&#x27;s the same exact investment, the EJ version of iShares whatever can (probably will) have a different stock symbol than another investment company&#x27;s. This is because the ICs all get kickbacks from putting money into these mutual funds.<p>2. If you go to Vanguard (for instance) and initiate a transfer from EJ, Vanguard will charge $20 <i>for each proprietary fund</i> they have to sell. They are not allowed to hold these proprietary funds. When investing at EJ, I had multiple accounts (regular, SEP IRA, ROTH IRA, Inherited IRA), and each account had 10-12 investments in their Guided Solutions program (the advisor picks). So that&#x27;s 50 funds at $20 a pop, or about $1000 if Vanguard sells the funds.<p>3. Instead, you can have your current money manager either a) move your investments into something that will transfer in kind. This may mitigate your capital gains tax issues - not sure. Vanguard can advise you on this, and from my experience, they are very happy to help you figure out this kind of stuff. Or b) tell your current firm to move all your investments into cash, then do the transfer. As you said, you have capital gains then.<p>4. EJ also charged me $100 per account to close my business with them. Thanks, I really appreciate an extra $500 fee when I&#x27;m leaving.<p>Moving to EJ and back was a really stupid thing for me to do in hindsight. The first year was great, I should have just moved a little more for the 2nd year instead of everything, and I would have seen that the first year was somewhat of a fluke and they couldn&#x27;t keep up that performance every year. I had a lot of capital gains from the 2 transfers, it screwed up my health insurance payments, I was out of the market for 2 months while they lolly-gagged around doing the transfers (no one knew why it was taking so long), etc.<p>For me, it is way more comfortable being in index funds rather than proprietary funds. The EJ proprietary funds might beat the market a lot, or might get beaten a lot, but they sometimes invest in a handful of stocks - maybe 20 - and if they are wrong, it&#x27;s bad. Whereas with broad market funds, I know I&#x27;m losing or gaining with everyone else and don&#x27;t get anxious about it.<p>Good luck!
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