Waddell & Reed

[green_goblin12]

I've been investing with Waddell & Reed for a few years now and am starting to look at the high fees I'm paying. I don't mind paying fees, but I don't feel like I'm getting much out of it. I have a Roth with several funds, all class A shares with 5.75% front loads and expense ratios between 1-2. I also have an emergency/car fund with several funds, including muni bonds, which aren't doing too bad now.

I'm feeling that I'm not maximizing my savings, not due to poor return, but due to fees, which is something I can control.

If I understand correclty, for every $100 I put into a Class A mutual fund here, I'm really only investing $92.50 if load is 5.75 and er 1.75. Is that a correct assumption?

I'd like to switch the Roth to Vanguard, but it seems like such a hassle and I'm afraid of the fees I'll get hit up to do this.

Does anyone have any experience with Waddell & Reed? How do I go about switching a Roth, or even closing the whole account (only around $40K)?

[bjl584]

I've switched my investments once. My Roth had to be liquidated to cash and then moved to the new brokerage firm. Other than that, it was no real hassle. It was all done electronically.

[Slug]

It sounds like a great idea to switch based on what you've shared. I'm not sure why you would switch to Vanguard and lock yourself into a single brand of mutual funds when you could be trading commission-free at several brokerages, but if that's what you want then go for it.

[Petunia 100]

Just go to Vanguard.com, open a new Roth, then indicate you want to transfer assets in. Or call their customer service number and they will help.

You pay that 1.75 er not just once, but year after year after year. Personally, I would pay any fee I needed to pay and move my money out. It won't take long at all to break even on any exit fee, after that it is all gravy.

If you want a brokerage account, Vanguard has those too.

[thefrugaltoad]

Sorry to hear about your situation but am curious, did you not look at prospectus before investing? W&R have always had some of the highest fees and poorest performance. I was looking at a 529 Plan they were running for Arizona and could not believe they were allowed to get away with what they were doing. Apparently so did the State Legislature as W%R were fired.

Look at Vanguard as they have some of the lowest fees in the industry and a wide array of top class funds.

Paul - The Frugal Toad

[dczech09]

A front end load of 5.75% is absolutely ridiculous. I would change as soon as I can. Your broker (Waddel & Reed) is making some good money for very little work. Oh and you're paying it.

Changing is very easy; I did a rollover to T Rowe Price and it was a cake walk.

[green_goblin12]

When I opened this account, at age 24, I did not know what a prospectus was, unfortunately. And, of course, I didn't know what to ask about fees and like any good registered rep, the fees weren't disclosed. I was just focused on starting a savings/investing plan ASAP.