Why We Left Our Financial Advisor and Moved to Vanguard: Cutting Fees for Financial Independence (FI)
Mr. DINK’s uncle was our financial advisor, and breaking up was tough—but it had to be done.
If it weren’t for Mr. DINK’s uncle, I’m not sure we would’ve started investing years ago, and we’re truly grateful for his guidance. But after reading The Simple Path to Wealth and The Psychology of Money, as well as The Intelligent Investor (which I don’t recommend unless you’re already familiar with investing), I started seeing the high fees we were paying in a whole new light. I kept thinking about how much further along we could be without these fees.
Mr. DINK’s uncle works for a financial company that, in my opinion, charges steep fees. For example, I was paying $150 a month in “platform fees,” and Mr. DINK was paying a percentage of each trade, even though we were making most of the decisions ourselves and frequently evaluating our portfolios.
I knew we needed to move our investments to Vanguard, where the fees are much lower, but since the advisor was Mr. DINK’s uncle—his favorite family member—I waited for him to get on board. It took some time, but after Mr. DINK read The Simple Path to Wealth, The Psychology of Money, and The Intelligent Investor, he had his “aha” moment. When he realized he was being charged 2% on dividends, that was the final straw. He always thought paying for human advice made sense, but 2% on dividends felt like too much.
In early September, Mr. DINK called his uncle to thank him for all his help over the years, but explained that it was time for us to lower our fees. We ended up paying $640 just to transfer our accounts and sell some underperforming funds, plus the usual $150 in platform fees for my accounts that month, along with a few extra charges on Mr. DINK’s side. Altogether, we spent almost $800 in fees in just one month!
While we’re not financial advisors or certified public accountants (CPAs), we suggest to our friends to:
Read The Simple Path to Wealth.
Open a Vanguard account.
Start investing today.
We’re also working on a series of posts where we’ll share all our investing mistakes, so stay tuned!
What to Do If You’re On the Fence
If you’re considering moving from a high-fee financial company but aren’t sure how to approach it, here’s something important to know: you can do it without even having to confront your financial advisor. We’ve heard that some advisors can get pushy when you mention wanting to move your money. If this happens, you can open an account with Vanguard (or another low-fee provider) and request an “in-kind” transfer. Here are the two main benefits of doing this:
You don’t have to deal with your advisor directly.
You don’t have to sell your investments, which could trigger a taxable event or force you to buy back in at higher prices.
While our journey hasn’t been perfect, taking control of our investments and reducing our fees has been one of the best decisions we’ve made on our path to financial independence.
We’d Love to Hear From You
Have you ever had to break up with a financial advisor or switch investment platforms to lower fees? What was your experience like? Share your story in the comments below! We’d love to hear how you handled the transition and whether it’s made a difference in your financial journey.
