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An older (retired) relative asked for my help to assess their current investments in their IRA accounts.

I'm not looking to give them investment advice (I'm not qualified and don't want that responsibility), but I would like to help them move from funds with high expense ratios to equivalent funds with low(er) expense ratios. They only hold a handful of funds (less then 20, maybe even less than 10).

However, I would like to give them solid advice that they could take action on.

I see three possible paths:

  1. I could look at each fund and use some sort of tool to find an equivalent fund/ETF that has lower expenses. They only such tool I have found is at Vanguard (https://advisors.vanguard.com/VGApp/iip/site/advisor/analysistools/findsimilarproducts). Does anyone have experience using this or another tool they would recommend?

  2. I could put all their information in a tool like FutureAdvisor, which will give a free assessment (or make the trades for you if you pay them). I believe the downside to this is that it will make recommendations based on asset allocations it will select (or help you select), so won't convert holdings on a 1-to-1 basis.

  3. I could recommend that they transfer all holdings (~300K) to Vanguard or Fidelity who tend to have funds with lower expense ratios than most traditional brokerages.

For reference, a few funds they hold are:

PDBCX FFRCX PLNCX FRFCX

All of these seems to have expense ratios above 1.3%.

Phil Sandler
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1 Answers1

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The Vanguard tool seems like a good bet. You don't necessarily have to invest with the fund they recommend; you look at what index it follows, and then find other funds or ETFs following that same index.

Another component of costs are the fees the current brokerage charges for trading and account maintenance. Those are on top of the funds' fees. You don't have to have a Vanguard account to invest in Vanguard funds, nor similarly for Fidelity. However, those are two examples of lower cost brokerages, and moving the account there could lower the account fees too.

stannius
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