is it bad to just dump bad MF and reinvest?

**james.hendrickson** · 09-15-2021, 11:23 AM

I see no issues dumping that and buying some decent securities.

**LivingAlmostLarge** · 09-15-2021, 11:48 AM

I'm nervous because I worry the market is very high and just selling bad and reinvesting seems nuts. Yes it's just moving stuff but still.

**Like2Plan** · 09-15-2021, 12:03 PM

Are all these shares small odd lots? Are these in taxable accounts? What impact will Capital Gains (if any) have on their taxes? How about IRMAA?

I would probably rip the band-aide off and take away some of the chaos in their portfolio if it didn't result in unintended tax consequences. Also, as long as they have assets that will see them through a downturn. Because, you are right--we could be at the top of the market. (And, you might get some feedback on it)

**james.hendrickson** · 09-15-2021, 12:10 PM

@LAL, well, on some level you probably aren't able to control the movements of the markets - but you can control how you react. If you think prices are going to decline, why not buy some bonds? VBMFX is a very nice bond index fund.

**disneysteve** · 09-15-2021, 12:36 PM

Don't worry about what the market is doing. A drop in the market can affect the new holdings just as much as the current holdings so it's irrelevant, and a diversified portfolio will likely perform better in a downturn anyway.

How much of the $1M is in a taxable account?

Do you have all of the cost basis info on the holdings? Are any of them sitting at a loss from basis? If so, you can sell those to offset any holdings that have gains to help limit the tax impact of selling everything.

Since it's late in the year, you may also want to not sell all at once. Instead sell some now and some after the first of the year so that any gains get spread over 2 tax years.

But ultimately, yes, Raymond James is HUGE rip off that totally preys on uneducated customers. The sooner you can get away from them the better. Even if it results in a big tax bill it may be worth it.

**james.hendrickson** · 09-15-2021, 12:40 PM

Ditto on Raymond James - they're bottom feeders.

**disneysteve** · 09-15-2021, 12:52 PM

I said this over at the ER site, but also consider VTI rather than VOO to get better diversification.

**LivingAlmostLarge** · 09-15-2021, 03:08 PM

If the market drops 20% then it will look like 20% drop predicated on my changes to say VTI and BSV

**scfr** · 09-15-2021, 03:59 PM

Will your mom actually pass your suggestions/instructions on to the financial advisor?

**Like2Plan** · 09-15-2021, 04:17 PM

The other thing you should do is stop any dividend reinvestment for anything you are planning to sell in the near future.

**disneysteve** · 09-15-2021, 04:23 PM

Originally posted by Like2Plan View Post

The other thing you should do is stop any dividend reinvestment for anything you are planning to sell in the near future.

Actually stop all reinvestment. At the very least, as cash accumulates you can put it into a better fund.

This is what I do with my mom's Ameriprise account. As cash builds up, I transfer it out to her Vanguard account. I haven't had her sell any holdings at all but I've transferred out tens of thousands of dollars in the past year or so this way.

**LivingAlmostLarge** · 09-15-2021, 04:29 PM

Originally posted by scfr View Post

Will your mom actually pass your suggestions/instructions on to the financial advisor?

Yes she is probably going to forward word for word. A lot stemmed from the margain loan and not knowing why they had loans on their accounts and money was moving in and out from one account to another. Then not knowing why there were fees cropping up from money movement. It's very complicated. They have each 2 accounts of every type of account so that they are only charged on one of the accounts so they aren't paying 3% annual management fee only like 1.5%. If it was consolidated I asked they would be paying 3% or $30k/year on $1m. Yes you read that right.

On top of that the margain loans were bad. It was pretty substantial and they had it from 2007 to 2019. They had cash sitting both in their checking/savings as well as in the accounts themselves but Merrill Lynch and Raymond James allowed them to borrowing on margain for 1 share purchases etc and charged them an average of 6-8% interest when they had enough cash to pay it off. So it was not good situation.

And no we are not leaving RJ. They feel that people like them with "money" get help. Their friends are turned away for not having enough and they have enough. It's a status thing and such. To quote one of their friends "i didn't realize we had to save more while working. I don't know where all the money we earned went. We were doctors. We should have had more."

**disneysteve** · 09-15-2021, 04:47 PM

Originally posted by LivingAlmostLarge View Post

If it was consolidated I asked they would be paying 3% or $30k/year on $1m. Yes you read that right.

On top of that the margain loans were bad. It was pretty substantial and they had it from 2007 to 2019. They had cash sitting both in their checking/savings as well as in the accounts themselves but Merrill Lynch and Raymond James allowed them to borrowing on margain for 1 share purchases etc and charged them an average of 6-8% interest when they had enough cash to pay it off. So it was not good situation.

So charge 6-8% interest on a margin loan that wasn't needed. Use the money to buy a single share of stock and charge a 10% commission on the trade. And then charge 3% AUM on top of that. What a great racket. They should all be in prison.

**Jluke** · 09-15-2021, 05:30 PM

I’m curious about MO. Assuming this is Altria whose high of almost 90/share came in 2006.

at 10 shares how much (in dollars) could they have possibly lost?

You can tax loss harvest that one if in a taxable account. Just watch for wash sales if dividends were reinvested.

it’s tough managing your own investments but even harder managing others for the fear of that immediate loss.

is it bad to just dump bad MF and reinvest?