Thinking about making the switch from Edward Jones to Vanguard? You're not alone! Many investors consider this move, often driven by a desire for lower fees, a more hands-off investment approach, and the robust suite of passively managed index funds and ETFs that Vanguard is renowned for. While Edward Jones offers personalized advice and local advisors, its fee structure can sometimes be higher compared to Vanguard's investor-owned model.
This guide will walk you through the process, step by step, ensuring a smooth transition of your investments. Let's get started on optimizing your financial future!
How to Switch from Edward Jones to Vanguard: A Comprehensive Guide
Step 1: Understand Why You're Making the Move (and what it entails!)
Before you initiate any transfer, it's crucial to understand why you're considering this change and what the implications might be. Are you looking to reduce fees? Gain more control over your investments? Align with Vanguard's philosophy of low-cost, broadly diversified indexing?
Consider the following aspects:
- Fee Structures: Edward Jones typically operates with commission-based fees on trades and advisory fees that can be higher (e.g., 1.35% annually for their Advisory Solutions program). Vanguard, on the other hand, is known for its transparent, low-cost approach, often with $0 commission for online stock and ETF trades and advisory fees around 0.3% annually for their Personal Advisor Services (for accounts over $50,000). This difference can significantly impact your long-term returns.
- Investment Philosophy: Edward Jones emphasizes personalized, long-term wealth management with a focus on client-advisor relationships. Vanguard prioritizes simplicity, accessibility, and low-cost investing, primarily through index funds and ETFs.
- Advisory vs. Self-Directed: Edward Jones offers a more traditional, hands-on advisory experience with local advisors. Vanguard offers both self-directed investing and advisory services, but even their advisory services tend to be more cost-effective and emphasize broad market exposure.
Ask yourself: Am I comfortable with a more self-directed approach, or do I still desire some level of guidance, albeit at a lower cost?
Step 2: Gather Your Information and Prepare
Preparation is key to a smooth transfer. You'll need specific details from your Edward Jones accounts and some personal information to set up your Vanguard accounts.
Sub-heading: What You'll Need from Edward Jones:
- Account Statements: Obtain your most recent account statements from Edward Jones for all accounts you intend to transfer (e.g., Traditional IRA, Roth IRA, taxable brokerage account, 401(k) or other retirement plans). These statements will provide crucial details like account numbers, asset holdings, and cost basis information.
- Login Credentials: Have your Edward Jones online account login (username and password) handy. This can often expedite the transfer process if Vanguard can link directly to your account.
- Types of Accounts: Clearly identify the exact type of each account you hold at Edward Jones (e.g., Traditional IRA, Roth IRA, Individual Brokerage, Joint Brokerage, SEP IRA, SIMPLE IRA, 401(k) from a previous employer). This is vital for ensuring a "like-to-like" transfer at Vanguard.
Sub-heading: What You'll Need for Vanguard:
- Personal Information: Your Social Security number, date of birth, current address, and employment information.
- Banking Information: Details for a linked bank account (routing and account numbers) for future deposits or withdrawals.
- Beneficiary Information: If transferring retirement accounts, you'll need to designate beneficiaries for your new Vanguard accounts.
Step 3: Open Your New Vanguard Accounts
This is where the rubber meets the road. You'll initiate the transfer process from the Vanguard side.
Sub-heading: Starting the Transfer Online:
- Visit Vanguard's Website: Go to Vanguard's official website (investor.vanguard.com) and look for the "Open an Account" or "Transfer an Account" section.
- Select Account Type: Choose the type of account you want to open at Vanguard that corresponds to your Edward Jones account. Remember, it's generally best to transfer "like-to-like" accounts (e.g., Edward Jones Traditional IRA to Vanguard Traditional IRA). If you're new to Vanguard, you'll open a new account to receive the transfer. If you're an existing client, you'll select an eligible account.
- Initiate Transfer: Look for the option to "Transfer an account from another firm."
- Connect Your Accounts (if possible): Vanguard may offer the option to electronically connect to your Edward Jones account using your login credentials. This can streamline the process.
- Enter Account Details: If electronic connection isn't available or preferred, you'll manually enter your Edward Jones account number(s) and specify which assets you want to transfer (all or a partial transfer).
- Provide Personal and Employment Information: Complete the necessary personal and employment details as part of the account opening process.
- Review and Submit: Carefully review all the transfer details for accuracy before submitting your request.
Sub-heading: In-Kind vs. Cash Transfer:
- In-Kind Transfer: This is the preferred method. "In-kind" means your existing investments (stocks, ETFs, mutual funds) are transferred from Edward Jones to Vanguard without being sold. This avoids potential capital gains taxes on taxable accounts and keeps you invested in the market throughout the transfer. Most assets can move in-kind.
- Cash Transfer (Liquidation): If your Edward Jones holdings are proprietary mutual funds not available at Vanguard, or if you simply wish to change your investment strategy entirely, you may need to sell your Edward Jones assets and transfer the proceeds as cash. Be aware of potential tax implications for taxable accounts if you liquidate assets with capital gains. You will then need to reinvest this cash into Vanguard funds.
- Money Market Funds: If you have money in an Edward Jones money market fund, it will typically be liquidated and transferred as cash into your Vanguard money market settlement fund.
Step 4: Monitor the Transfer Process
Once you've initiated the transfer, Vanguard will work with Edward Jones to move your assets. This process can take some time.
- Tracking Your Transfer: Vanguard provides tools to track the progress of your transfer online. Look for a "Track Your Transfer" link on your Vanguard account details page.
- Paperwork Requirements: If your transfer requires additional paperwork (e.g., for certain retirement plans or if you choose a partial transfer), Vanguard will provide pre-filled forms for you to print, sign, and mail, often along with a recent Edward Jones statement. Be prompt with any required paperwork to avoid delays.
- Communication: Vanguard will typically keep you updated throughout the process. Don't hesitate to reach out to Vanguard's customer service if you have questions or if the process seems to be taking longer than expected.
- Typical Timelines: Digital transfers can be as quick as 5-7 business days. If paperwork is involved, it may take longer, often 2-4 weeks for complex transfers like 401(k) rollovers.
Step 5: Reinvest (if necessary) and Optimize Your Portfolio at Vanguard
Once your assets have successfully arrived at Vanguard, it's time to ensure they are invested according to your financial goals.
- Reinvesting Cash: If you transferred assets as cash, or if some of your Edward Jones holdings were liquidated, you'll need to actively invest that cash into Vanguard's broad range of low-cost index funds, ETFs, or other securities.
- Review Your Holdings: Even with an in-kind transfer, it's a good idea to review your transferred holdings. Ensure they align with your desired asset allocation and investment strategy. You might consider consolidating into fewer, broader index funds if that's your goal.
- Explore Vanguard's Offerings: Familiarize yourself with Vanguard's extensive offerings, including their popular target-date funds, total stock market index funds (like VTSAX or VTI), total bond market index funds (like VBTLX or BND), and other specialized ETFs.
- Consider Vanguard Personal Advisor Services: If you still desire professional guidance but at a lower cost than Edward Jones, explore Vanguard Personal Advisor Services. They offer automated advice with access to human advisors for a fee that is typically much lower than traditional advisory firms.
- Update Beneficiaries: Double-check that your beneficiaries are correctly set up on all your new Vanguard accounts, especially for retirement accounts.
Step 6: Close Your Edward Jones Accounts (Optional, but Recommended)
Once you're certain all your assets have successfully transferred to Vanguard, you can formally close your Edward Jones accounts.
- Verify Zero Balance: Before closing, ensure that the Edward Jones accounts have a zero balance and that no pending transactions or dividends are expected.
- Contact Edward Jones: Reach out to your Edward Jones financial advisor or their customer service department to officially request the closure of your accounts. They may have a specific form or process for this.
- Confirm Closure: Ask for written confirmation that your accounts have been closed.
Related FAQ Questions
Here are 10 frequently asked questions about switching from Edward Jones to Vanguard, with quick answers:
How to transfer an Edward Jones IRA to Vanguard?
You can initiate an "in-kind" transfer directly from Vanguard's website by opening a new Vanguard IRA (Traditional or Roth, matching your Edward Jones IRA type) and selecting the option to transfer assets from another firm. You'll need your Edward Jones account information.
How to transfer an Edward Jones Roth IRA to Vanguard?
Similar to a Traditional IRA, open a new Roth IRA at Vanguard and initiate an "in-kind" transfer. Ensure the account types match to avoid any tax implications.
How to roll over an Edward Jones 401(k) to a Vanguard IRA?
If your Edward Jones 401(k) is from a previous employer, you can roll it over to a Vanguard Traditional IRA. Vanguard has a dedicated 401(k) rollover process on their website where you can select the "rollover" option.
How to transfer a taxable brokerage account from Edward Jones to Vanguard?
Open a new taxable brokerage account (e.g., individual or joint) at Vanguard and initiate an "in-kind" transfer of your assets. Be mindful of potential capital gains if you decide to sell any assets before or during the transfer.
How to find my Edward Jones account number for transfer?
Your Edward Jones account number can typically be found on your monthly or quarterly account statements, or by logging into your Edward Jones online account.
How to determine if my Edward Jones investments can be transferred in-kind to Vanguard?
Most common stocks, ETFs, and widely held mutual funds can be transferred in-kind. However, proprietary Edward Jones mutual funds or certain limited partnership interests may need to be liquidated and transferred as cash. Vanguard will usually inform you during the transfer process if an asset cannot be transferred in-kind.
How to avoid transfer fees when moving from Edward Jones to Vanguard?
Edward Jones may charge an account transfer out fee (often around $75-$95 per account). While Vanguard doesn't typically charge to receive assets, they generally don't reimburse transfer-out fees from other institutions. It's worth confirming with Edward Jones their specific transfer-out fees.
How to invest in Vanguard index funds after transferring from Edward Jones?
Once your assets arrive at Vanguard, you can use the cash (from liquidated assets) or exchange your in-kind transferred assets (if they are not already Vanguard funds) into Vanguard's low-cost index funds and ETFs through your Vanguard brokerage account.
How to get help during the transfer process to Vanguard?
Vanguard offers robust customer support. You can typically find help through their website's FAQ section, online chat, or by calling their customer service line. They are well-versed in assisting with transfers from other institutions.
How to ensure all my cost basis information transfers correctly to Vanguard?
For "in-kind" transfers of taxable brokerage accounts, the cost basis information should transfer automatically under IRS regulations. However, it's always wise to verify this after the transfer is complete by checking your Vanguard account statements and comparing them to your Edward Jones statements. If there are discrepancies, contact Vanguard's customer service.