Edward Jones IRA and Ross IRA review

Edward Jones is a full-service brokerage company that provides traditional and Roth individual retirement accounts (IRA). If you are considering opening an IRA with this company, this is what you need to know, including the investments and services it provides, and the costs involved.

Edward Jones overview

Edward Jones was founded in 1922 and is headquartered in St. Louis, Missouri. It is one of the largest broker-dealers in the United States, serving more than 7 million investors and has more than 49,000 financial advisors.

Key points

  • Edward Jones is a full-service company suitable for investors who need financial advisors to provide investment advice.
  • It offers traditional and Roth IRA through commission or fee accounts.
  • Before opening an account, make sure you understand how fees and commissions work.
  • Investment options include stocks, bonds, mutual funds and exchange-traded funds (ETF).
  • Whether Edward Jones is the right choice depends on the quality of the consultants and their relationship with you.

Full-service brokers such as Edward Jones hire financial advisers to advise investors and pay for them. This is different from discount brokers, whose investment decisions are made by investors themselves through online accounts to conduct research and buy and sell securities. Therefore, the fees for discount brokers are much lower, such as Fidelity Investments and Charles Schwab Corporation.

Opened an IRA in Edward Jones

Investors who want to open a traditional or Roth IRA in Edward Jones must find a local financial advisor. Considering that the company has branches in 50 states, usually with a consultant and an administrator, this shouldn’t be difficult.

In order to prepare for the first date, investors should be prepared to explain why they invest. They should also collect statements to present to consultants and prepare questions. Edward Jones financial advisors will assess the needs of investors and develop a tailor-made investment plan.

Choose Tradition and Roth IRA

Traditional IRAs provide tax relief and tax deferral for any income. When you retire, withdrawals will be taxed according to your income tax class. The Roth IRA does not provide immediate tax deductions, but all proceeds and withdrawals are tax-free. Edward Jones financial advisors will help you determine whether a traditional IRA or a Roth IRA is better.

Edward Jones does not provide online trading, so to buy or sell securities, you must call your advisor.

By 2022, investors can contribute up to $6,000 to traditional or Roth IRAs. Investors aged 50 or over may pay an additional $1,000 in supplementary contributions. These figures have not changed since 2021.

Depending on the tax filing status, even if you contribute to an employer-sponsored retirement plan, traditional IRA contributions can be deducted. For example, a single tax filer covered by a workplace retirement plan can deduct full contributions if the revised adjusted gross income (MAGI) for 2021 is US$68,000 or less, which is higher than US$66,000 in 2020.

Not every investor can contribute to the Roth IRA. By 2022, if the MAGI of a single taxpayer is less than US$129,000, it can be paid in full. Once it reaches US$144,000, it will be phased out. The range in 2021 is US$125,000 and US$140,000.

Investment lineup

An IRA can be established on the basis of commissions or fees. Since Edward Jones is a full-service brokerage company, its financial advisors provide many different investment options. Stocks, bonds, ETFs and mutual funds are among the options available to customers. Financial advisors can help determine which investments are suitable for retirement accounts based on the client’s investment goals and risk tolerance.

The Consulting Solutions Investment Plan is an Edward Jones managed account available to clients. These accounts charge annual consulting fees instead of commissions. Consulting solutions have a variety of asset allocation models, including a wide range of vetted mutual funds and ETFs.

Bridge Builder’s proprietary mutual fund lineup is unique to Edward Jones Consulting Solutions. Eight different sub-recommended funds can be used in a range of asset classes, including domestic stocks, international stocks and fixed income investments.

For example, the expense ratio of Bridge Builder Core Bond Fund (BBTBX) is 0.14%, and as of December 16, 2021, its one-year average return rate is -1.00%. This is slightly better than the -1.06% return of its benchmark Bloomberg US Aggregate Bond Index (formerly Bloomberg Barclays Aggregate US Bond Index) over the same period.

Fees and commissions

Edward Jones’ traditional and Roth IRA accounts have an annual fee of $40. However, customers with total assets of more than USD 250,000 are tax-exempt.

The commission in the IRA may vary, depending on the securities purchased. Stocks and ETF transactions generate approximately 2% commissions. Mutual fund commissions depend on the stock category. A-share mutual funds have higher upfront costs, while C-share funds have a relatively flat fee structure.

The consulting solution plan requires a minimum account of USD 25,000 and an annual fee ranging from 0.09% to 1.35% based on the number of assets under management. The more you have, the lower the cost. In addition to the annual plan fee, you also need to pay for the fund.

Edward Jones and the competition

Edward Jones is comparable to other full-service brokerage firms such as Morgan Stanley or Merrill Lynch (formerly Merrill Lynch). The real comparison will be the relationship established between the financial adviser and the client.

Commission and advisory investment plans are also similar to other full-service brokerage companies. However, Edward Jones’ annual IRA account fees are lower. For example, Morgan Stanley charges a fee of US$75 to customers who sign up to deliver documents and statements to their accounts electronically, but waives the fee for customers who have at least US$1 million in total company assets.

Bottom line

Overall, Edward Jones is a viable option for investors who want to open a traditional or Roth IRA at a full-service broker-dealer and are willing to pay fees and commissions to obtain investment advice from an advisor. The most important factor is the quality of the financial advisor and the relationship with the client.

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