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This post doesn't concern me so much as it concerns my mom's financial well being. Since I have been a Fool, I have learned about the ways of the analyst and the FS broker. She however is quite the fool and believed when her broker told her "I don't make money unless you make money." She has come to learn that that is not the case. I added up the commissions for the period 11/26/2001-1/24/2002 and it totals....$905.50. Thats a lot of money gone for a guy who has done nothing but placed her money in loaded mutual funds and stocks that he trades far to much. As of today, my mom will say "No" to all cold calls. In the near future I plan on taking control of her IRA through a discount broker and slowly giving the power to her. She has become upset and wants to take the control back, she just wants to learn a little more. Here is my question. Should I let it sit a while before I start selling her mutual funds and putting them into an index fund? And what about the stocks? I have started ordering the financials for the companies and hope to learn more about them, besides what I already know. Here is how its broken down.

2165.916 shares of MFS Startegic Growth Fund Class B (MSBGX) @ $18.44 per share

256.828 shares of MRS Startegic Growth Fund Class A (MFSGX) @ 18.92

13,639.606 shares of MFS High Income Fund Class B (MHIBX) @ 3.72

222 shares of Mercury Interatice Corp (MERQ) @ 37.65

417 shares of Network Appliance Corp (NTAP) @ 20.37

190 shares of NVidia Corp (NVDA) @ 44.38

226 shares of Siebel Sys Inc (SEBL) @ 32.60

and $51.67 in a money market fund.

This guy is screwing my mom over and its pissing me off. COuld you guys give me any helpful words of advice for when I take this IRA over. It is a traditional IRA, I believe a Rollover type. My mom is almost 46 and plans to work past 65. She also contributes 5% of per pay to her companies 401k. She has 19,000 in credit card depth and no short term savings. She is in pretty bad shape. The reason I know all of this is because I got her rates lowered on her cards and transfered balances to lower rate cards. I tell her how much to pay. I pretty much control their finances, because they were to lazy in the past. I'm trying to get her financial situation heading in the right direction, because as it is the financial well being of her and my father is horrible and they would sleep better at night if they had no debt and know where there money was going. Please help me to help them and help them as well!!!!

Thanks
Brett
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No. of Recommendations: 5
Brett.

Oh my God. You sound like me. My mom is the same way. Just be thankful yours is only 46 -- mine is 79. Good for you for getting a handle on this.

The way that I handled it was to get her out of the claws of her Merrill Lynch broker "tout suite." The move we made easier in that I initially put her into Schwab where I told her that she would still have the opportunity to have advise from a broker, but she wouldn't be paying a commission. In reality she never used it, and they pushed Schawb funds anyway, but if your mom is really stubborn, it might be a way to go. Keep in mind, however, that they charge a transaction fee to buy Vanguard funds there.

Your other option is Scottrade, which I think you've asked about before. Don't expect the level of service that you would get at Schwab, but you won't be paying the price either.

As far as the loaded funds go, if it were me, I'd dump 'em. The first two you listed, at first glance, look very similar. So combine your expense ratios and she's paying in the neighborhood of 3.37% -- yikes!

Choose a good index fund for her -- VTSMX or something like that, and maybe a bond fund when the market recovers, or even a Lifestrategy fund of funds from Vanguard -- and get the IRA working for her where you don't have to think so much about it.

As far as selling now, think of it this way, "yes, the funds you're selling may be on the low side but, then again, so will be the stock fund you're buying into." Just a thought.

Good for you for getting her CC interest reduced. She really needs to rid herself of that. Is there any way you can make sure she's making over and above the minimum payments? That's the only way that's going to happen.

As far as the individual stocks go, first of all, see what you think of the companies. Are they good solid investments? If so, why not talk her into keeping a small portion and selling the rest. That way she has some investment in them, but the bulk of her savings isn't tied up in 4 stocks. ( I didn't look them up so, except for SEBL, I have no idea what they are.)

And get an emergency fund going for her. I have my mom set up with an AIP (Automatic Investment Plan) which is adding $250 to her money market everymonth. The emergency fund is really important. You might look into Netbank (www.netbank.com). They have a good MMkt. I don't know if they AIP or not, you'll have to search around or call them.

My mom's is at Vanguard where she keeps some of her stocks, so she doesn't have to pay low balance fees on her MMkt. If you go for a straight MMkt account there, watch the fees. I hear ING is good too, but I have no first hand knowledge. Whatever the case, an AIP might do her very well since she doesn't really have the drive to save on her own. (FYI - Scottrade does not have a MMkt account, and their cash account pays very poorly.)

Well, I'm sure there's more, but I can't think of it right now. I hope this helps.

Caat
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Bigcaat,

Thank you for the advice. I had planned on transfering her IRA to scottrade. She doesn't need to get advice because she will take whatever is given to her and I don't like the idea of a broker figuring that out.

Her credit card payments are designed by me. She has payed down a little over 26k in CC debt with my help, down to 18 or 19k. I make her pay the most she can, normally 500 on one and 250 on the other. Her little department store cards are about all payed off so once that is done all that money will go to the other CC. I'm concentrating the most on getting this payed down. After I will open her up an ING Direct account. I have two of them both earning at or a little above 3.00 APY.

I know what a few of the companies in her stocks are. NVidia makes graphics chips. But I am unfamiliar with the other 3 for the most part.

Her mutual funds are nuts and I'm having problems decided whether to wait until its transfered to sell and then buy, to save on commission or just order her broker to do it now.

Thank you for the help. Any other thoughts anyone?

Brett
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Her mutual funds are nuts and I'm having problems decided whether to wait until its transfered to sell and then buy, to save on commission or just order her broker to do it now.

Scottrade -- good choice. Have you checked with them to see if those funds are sold in Scottrade's Supermarket of funds? If they are, then I would transfer straight across, then sell and buy into whatever else you want. I just did this with a Janus fund.

I believe that Scottrade has no fees for Mutual Funds transactions, no matter what the fund, but check to make sure. If they don't have them offered, you may not be able to do it any other way than to sell first then transfer. Technically, mutual fund transactions shouldn't cost anything through your broker either, but I seem to remember that Merrill Lynch said that, but there was always this piddly little service charge, or something like that attatched. (They're such slimes.)

What may happen, however, is you may be charged a fee to transfer the fund out of the company. You'll have to check with them. It's worth it though, to be out of their clutches. Who are you with?

Sounds like you're doing a great job.
Good luck with it all.

Hope this helps.
Caat
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I just got off the phone with Scottrade, and I'll transfer it as soon as possible, probably the beginning of May. Right now her broker is her best friends husband. I don't know how he looks at her in the face knowing what he is doing to her. He is with Rushmore Securities Corp in Dallas, TX. We get a lot of statements from Pershing. I'm not familiar with them. I want my mom to be happy with what her retirement money is doing. Once it's under our (family) control she will be able to sleep just a little bit better.

I'm sure her broker right now will want to charge her a ton of $$$, but I'll help her pay for it just so I know that everything is going good with her stuff. From my portfolio tracking, her total portfolio is down almost -9%. But her broker has brainwashed her to think "Everyone is losing money." Which is not true. You are very helpful. Thank you so much Caat.

Brett
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No. of Recommendations: 1
222 shares of Mercury Interatice Corp (MERQ) @ 37.65
417 shares of Network Appliance Corp (NTAP) @ 20.37
190 shares of NVidia Corp (NVDA) @ 44.38
226 shares of Siebel Sys Inc (SEBL) @ 32.60

These four companies were darlings of the market during dot-com mania, but lately they are quite a bit off their highs. When the broker was promoting them to your mom, what did he give as the rationale for buying them?

NVidia in particular seems to be an awful investment.
Siebel doesn't look too good either.
The other two haven't been going anywhere.

Before you dump the class B funds MSBGX and MHIBX, check out whether it would be more cost-efficient to leave them be until they become A shares that you can sell without paying a load. Perhaps you should just wait until the next time the back-end load decreases.
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