Thoughts on Edward Jones?

[Brennan Coulter]

I am 28 years old. I have 2 accounts through Edward jones, a Roth IRA and individual brokerage account.

What are pros and cons with using Edward jones? I've come to learn fees may be way higher long term than investing on my own? Should I pivot into my own investments with another firm or....? I am pretty smart however fear of the unknowns do exist. I started with EJ about 3-4 years before learning about Bigger Pockets and the fire movement and I've learned a lot from here. 

Any help and thoughts from your knowledge or own personal experience would be much appreciated!!! Thank you all so much 

[Dillon Kenniston]

Hey Brennan, great question. I wouldn't go so far as to say that EJ is always bad. I think the challenge comes from mismatched expectations on what clients should expect from their financial advisors.

If my own mother or best friend were looking for a financial advisor, I'd encourage finding a fee-only RIA who is a fiduciary at all times. (Bonus if they're independent.) The idea is: you want to operate within a fee structure that minimizes conflicts of interest.

EJ's revenue model by contrast is built around a brokerage model that's commonly transactional and based on product distribution (ie, commissions). Fee-only advisors avoid commissions and are, in general, investment product-agnostic, while EJ historically has had commissionable products + incentive structures around financial products. It's its own financial ecosystem that can be difficult to break out of.

There are some EJ advisors who are wonderful people who do the best they can for clients within their ecosystem. But its a fee model built to incentivize sales. The mismatched expectations are often operating under the hood: EJ clients may not always know or fully understand the transactional element to the relationship. (That's not necessarily true of all EJ advisors; many pursue transparency here, despite being generally limited to their approved suite of financial products.)

IMO, the first question to clarify is: Are you comfortable pulling all the levers of your own financial life, or would you benefit from help? If you're the DIYer, it's probably worth carefully weighing the EJ relationship. If you still want help, consider drawing from advisors who are fee-only fiduciaries at all times (such as from XY Planning Network or Fee-Only Network). And since you're posting on BiggerPockets: Bonus if they specialize in serving real estate investors! The key is: in general, what these advisors are selling is advice, not products.

Happy to answer any follow-up questions separately. At 28, you're clearly taking your investment journey seriously. Kudos to you for having a good head on your shoulders to ask questions like these. Keep getting after it!