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My company currently uses a full-service brokerage for
our SEP IRA's. With some work, I convinced "my
personal broker" to not invest in a 5.75% front-loaded
fund because of the high commissions, and instead find
a cheap S&P 500 index fund. One week later, he calls
back and happily informs me my money is
safe in an index fund that I had never heard of.
He said "Don't worry, all index funds are the same." On further
research, this fund ("Mainstay ..") has a 3% front-load
and 1.05% annual fees, despite just tracking the
index!

So here's the deal. I think I could convince the
powers that be to switch away from the full-service
broker, if I could find a SEP IRA administrator
with the following traits:
* automatic monthly purchasing
* a small list of diverse funds, for people who
aren't comfortable being self-directed
* low-commission brokerage services
* user-friendly

I currently use Waterhouse for my taxable investing.
I'm not sure if they do SEPs, and they're not as
user-friendly as may be necessary for my non-Fool
workmates. Does anyone know some other possibilities?

thanks,
Andrew
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Yes, Waterhouse does SEP's. That's where mine is.

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Greetings, Andrew, and welcome. You wrote:

My company currently uses a full-service brokerage for our SEP IRA's. With some work, I convinced my personal broker" to not invest in a 5.75% front-loaded fund because of the high commissions, and instead find a cheap S&P 500 index fund. One week later, he calls back and happily informs me my money is safe in an index fund that I had never heard of. He said "Don't worry, all index funds are the same." On further research, this fund ("Mainstay ..") has a 3% front-load and 1.05% annual fees, despite just tracking the index!

So here's the deal. I think I could convince the powers that be to switch away from the full-service
broker, if I could find a SEP IRA administrator with the following traits:
* automatic monthly purchasing
* a small list of diverse funds, for people who
aren't comfortable being self-directed
* low-commission brokerage services
* user-friendly

I currently use Waterhouse for my taxable investing. I'm not sure if they do SEPs, and they're not as
user-friendly as may be necessary for my non-Fool workmates. Does anyone know some other possibilities?


Schwab, Jack White, and USAA Brokerage Services all handle SEPs as I recall. I'm not familiar with any deep discounters that do, though. And as far as your present servicer goes, ain't it just sweet how he managed to find a load index fund for you? It's simply amazing how brokers can do so at every turn. I wonder if there's a message there.

Regards….Pixy

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<<I currently use Waterhouse for my taxable investing. I'm not sure if they do SEPs, and they're not as
user-friendly as may be necessary for my non-Fool workmates. Does anyone know some other possibilities?
>>

Fidelity and Vanguard
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agove wrote:
<<My company currently uses a full-service brokerage for our SEP IRA's.>>snip<< I think I could convince the powers that be to switch away from the full-service broker, if I could find a SEP IRA administrator with the following traits>>

1) My reading of my Form 5305-SEP seems to indicate that you can direct your employer to make SEP deposits into _your_ IRA. Specifically:

The employer makes contributions directly to an IRA set up by an employee with a bank, insurance company, or other qualified financial institution

Are you sure what you have is a SEP-IRA (or SARSEP-IRA)? Perhaps the full-service broker is just a convenience relationship your employer has developed to help those employees who don't have an interest in researching such things on their own? Note that commissions and loads must come out of funds in the IRA - so the only advantage of the current situation might be that your company may be paying your IRA administrative fees. Which sum to all of $10-$30 for accounts under $10k at most fund companies.

2) On a related note, I've heard of no restrictions on SEP-IRA rollovers. At worst, you should be able to roll your funds out of the full-service broker's IRA into your own self-directed, self-chosen IRA elsewhere. Most brokerages provide money-market funds with no load to park the money in meanwhile.

3) Just because a broker gives advice doesn't mean you have to take it. Have you asked him what it will cost to invest in a specific index, such as the Vanguard S&P500 index?



Basically, you're getting robbed,
scott
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