# I don't understand the account setup on my IRA (rather long, I'm afraid) **URL:** \ **Category:** Factual Questions\ **Created:** [December 1, 2024, 4:44am UTC](https://boards.straightdope.com/t/i-dont-understand-the-account-setup-on-my-ira-rather-long-im-afraid/1011009 "2024-12-01T04:44:30Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![Munch](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/munch/32/5281_2.png) [@Munch](https://boards.straightdope.com/u/Munch)\ **Post date:** [December 2, 2024, 12:15am UTC](https://boards.straightdope.com/t/i-dont-understand-the-account-setup-on-my-ira-rather-long-im-afraid/1011009/21 "2024-12-02T00:15:29Z")
> [@Roderick\_Femm](#): > > So some of you want to pay less for the same services? No, option 3: to pay a fee-based financial planner a one-time fee for a long term (5-10 years) financial plan that includes a blueprint to be able to easily invest in the funds yourself. ---
**Author:** ![Roderick\_Femm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/roderick_femm/32/14875_2.png) [@Roderick\_Femm](https://boards.straightdope.com/u/Roderick_Femm)\ **Post date:** [December 28, 2024, 11:22pm UTC](https://boards.straightdope.com/t/i-dont-understand-the-account-setup-on-my-ira-rather-long-im-afraid/1011009/22 "2024-12-28T23:22:45Z")
I have a couple of follow-up questions about the transfer of my IRA from one custodian to another. The first question is: does the first custodian have to sell off everything and transfer only money to the new custodian, who then buys a new set of stuff, or is it just some kind of paperwork transfer, with the same set of stuff being handled by new people? I ask because the percentages among the investment types (equities, ETFs and mutual funds) is somewhat different with the new custodian. And at one point near the end of the transfer, I noticed that there was quite a lot of cash sitting at the first custodian, apparently waiting to be transferred. The second question is: During the month of December, when this transfer was being done, the size of my IRA has gone down by almost 2.5%. Of course, fluctuations happen, but is it possible any of this reduction is purely a result of the transfer, i.e. transaction costs for selling and buying stuff (per the first question)? I guess I have a third question: should I expect an accounting of exactly what happened during the transfer, either from the custodian(s) or from my independent investment advisor? ---
**Author:** ![kenobi\_65](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/kenobi_65/32/13178_2.png) [@kenobi\_65](https://boards.straightdope.com/u/kenobi_65)\ **Post date:** [December 28, 2024, 11:26pm UTC](https://boards.straightdope.com/t/i-dont-understand-the-account-setup-on-my-ira-rather-long-im-afraid/1011009/23 "2024-12-28T23:26:53Z")
> [@Roderick\_Femm](#): > > The first question is: does the first custodian have to sell off everything and transfer only money to the new custodian, who then buys a new set of stuff, or is it just some kind of paperwork transfer, with the same set of stuff being handled by new people? I ask because the percentages among the investment types (equities, ETFs and mutual funds) is somewhat different with the new custodian. And at one point near the end of the transfer, I noticed that there was quite a lot of cash sitting at the first custodian, apparently waiting to be transferred. I moved several of my old 401(k) accounts to my main IRA this summer. Each time, it was a money transfer, not a transfer of securities, mutual fund accounts, etc., so it was undoubtedly a matter of the management company for each 401(k) (most were under Fidelity) cashing it out. Also, the transfers were each literally a physical check which was mailed from the old 401(k) management company to my financial planner, who administers my IRA for me. My financial planner than used the transferred money to purchase additional securities based on the percentages that he and I had previously agreed upon for my IRA. ---
**Author:** ![Munch](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/munch/32/5281_2.png) [@Munch](https://boards.straightdope.com/u/Munch)\ **Post date:** [December 28, 2024, 11:49pm UTC](https://boards.straightdope.com/t/i-dont-understand-the-account-setup-on-my-ira-rather-long-im-afraid/1011009/24 "2024-12-28T23:49:30Z")
> [@Roderick\_Femm](#): > > The first question is: does the first custodian have to sell off everything and transfer only money to the new custodian, who then buys a new set of stuff, or is it just some kind of paperwork transfer, with the same set of stuff being handled by new people? It could be that everything was cashed out to be reinvested, or that a portion of your account was transferred in-kind (where all shares of particular investments were transferred). For an IRA, there are no tax consequences of cashing it all out to transfer as a check. For a regular brokerage account, it’s a very big deal. Some custodians do not have access to some investments, so they’d just transfer as cash. > [@Roderick\_Femm](#): > > During the month of December, when this transfer was being done, the size of my IRA has gone down by almost 2.5% You likely had a termination fee in your original account, but the balance would have had to be really small for the fee to be 2.5%. Most likely it’s a reflection of the down market this month. ---
**Author:** ![Railer13](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/railer13/32/9742_2.png) [@Railer13](https://boards.straightdope.com/u/Railer13)\ **Post date:** [December 29, 2024, 1:07am UTC](https://boards.straightdope.com/t/i-dont-understand-the-account-setup-on-my-ira-rather-long-im-afraid/1011009/25 "2024-12-29T01:07:02Z")
> [@Roderick\_Femm](#): > > I have a couple of follow-up questions about the transfer of my IRA from one custodian to another. I recently transferred two IRAs and two Roth IRAs from their original custodians to Fidelity. In each case, the transfer was in kind, so the mutual fund holdings were exactly the same as they were before the transfer. Also in each case, there was a transfer fee levied by the ‘old’ company, but Fidelity either paid it or convinced them to waive the fee. I also transferred a 401k to the Fidelity IRA. In that case, the custodian had to liquidate the assets and wire money to Fidelity. I then purchased new assets with the cash. I believe I was told that 401k transfer rules are different than IRA-to-IRA transfers, but I cannot verify that. Perhaps someone with more knowledge can weigh in on that. Also, the Dow Jones is down 4.27% in the past 30 days. That may account for the majority of your account loss, as @Munch stated. ---
**Author:** ![LSLGuy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lslguy/32/5813_2.png) [@LSLGuy](https://boards.straightdope.com/u/LSLGuy)\ **Post date:** [December 29, 2024, 5:57pm UTC](https://boards.straightdope.com/t/i-dont-understand-the-account-setup-on-my-ira-rather-long-im-afraid/1011009/26 "2024-12-29T17:57:41Z")
Just did something similar. With the same results as the last few posters. .Depending on _what_ was held in the sending IRA, some of it may have been transferrable as shares (“in kind”), and others of it would have to be sold for cash, and then the cash transferred. Many brokerages or investment providers love to sell you funds they control that are not tradable on the public market. Those are the ones the other (gaining) brokerage could not possibly hold for you. So those would be the sorts of things that would have to be sold for cash. ---
**Author:** ![bobsmom101](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bobsmom101/32/2867_2.png) [@bobsmom101](https://boards.straightdope.com/u/bobsmom101)\ **Post date:** [December 29, 2024, 11:11pm UTC](https://boards.straightdope.com/t/i-dont-understand-the-account-setup-on-my-ira-rather-long-im-afraid/1011009/27 "2024-12-29T23:11:45Z")
^This, 100%! @Roderick_Femm , do you get a statement of your account every month? Do you review it? Warning signs are a lot of small transactions, most of them ending in losses (known as “churning the account” in the business) and hundreds or thousands of dollars in fees buried in the small print at the bottom. I do taxes for AARP, and it is heartbreaking to see how many retirees’ portfolios lose money even in bull markets and who pay big bucks for the privilege. These folks don’t read their statements, and don’t understand that “account managers” make their cut by trading the client’s money, whether it’s to the client’s advantage or not. If you really don’t want to manage your own funds, but still get a decent return, invest in one or more “target date” (e.g. Fidelity Freedom) funds and eliminate all the middlemen. ---
**Author:** ![Roderick\_Femm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/roderick_femm/32/14875_2.png) [@Roderick\_Femm](https://boards.straightdope.com/u/Roderick_Femm)\ **Post date:** [January 5, 2025, 4:34am UTC](https://boards.straightdope.com/t/i-dont-understand-the-account-setup-on-my-ira-rather-long-im-afraid/1011009/28 "2025-01-05T04:34:26Z")
I found out what they did in the transfer, the easy way: the month-end statement for the new custodian shows an amount for deposits and another amount for transfer of securities. So some things were sold on one end and then other (or the same) things were bought on the other end, and some things were just transferred. I do get a monthly statement, by the way. I have 11+ pages of individual securities in my portfolio, so I’m guessing somewhere around 150. There’s no way I would be able to track all that. However, the new custodian has a feature where I can get a list of all purchases and sales for a given time period. The one for last month, when the transfer was done, is huge. But I suspect that the next monthly one will be manageable, and interesting to study. ---
**Author:** ![Munch](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/munch/32/5281_2.png) [@Munch](https://boards.straightdope.com/u/Munch)\ **Post date:** [January 5, 2025, 1:45pm UTC](https://boards.straightdope.com/t/i-dont-understand-the-account-setup-on-my-ira-rather-long-im-afraid/1011009/29 "2025-01-05T13:45:21Z")
> [@Roderick\_Femm](#): > > I have 11+ pages of individual securities in my portfolio, so I’m guessing somewhere around 150. I’m curious - do you have 150+ different securities, or do you have like 10, but each of them have several lots (maybe you purchased different amounts at different times, dividends purchased smaller amounts, etc.)? ---
**Author:** ![LSLGuy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lslguy/32/5813_2.png) [@LSLGuy](https://boards.straightdope.com/u/LSLGuy)\ **Post date:** [January 5, 2025, 3:46pm UTC](https://boards.straightdope.com/t/i-dont-understand-the-account-setup-on-my-ira-rather-long-im-afraid/1011009/30 "2025-01-05T15:46:00Z")
If you really own 150 different securities you’re almost certainly being mis-handled by this guy in search of more revenue for him at the expense of less assets for you. ---
**Author:** ![bobsmom101](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bobsmom101/32/2867_2.png) [@bobsmom101](https://boards.straightdope.com/u/bobsmom101)\ **Post date:** [January 5, 2025, 4:40pm UTC](https://boards.straightdope.com/t/i-dont-understand-the-account-setup-on-my-ira-rather-long-im-afraid/1011009/31 "2025-01-05T16:40:48Z")
Yup, IMO this is a big red flag. It sounds like you might have the equivalent of index funds, but are paying big $$ for them. ---
**Author:** ![Railer13](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/railer13/32/9742_2.png) [@Railer13](https://boards.straightdope.com/u/Railer13)\ **Post date:** [January 5, 2025, 4:44pm UTC](https://boards.straightdope.com/t/i-dont-understand-the-account-setup-on-my-ira-rather-long-im-afraid/1011009/32 "2025-01-05T16:44:09Z")
> [@LSLGuy](#): > > If you really own 150 different securities you’re almost certainly being mis-handled by this guy in search of more revenue for him at the expense of less assets for you This is exactly why I didn’t accept an offer from Merrill Lynch to manage my money after retirement. I looked at the yearly statement of a fellow retiree who had her money with Lynch, and each month there were multiple trades of stocks, and each of those trades generated a charge for the customer. ---
**Author:** ![LSLGuy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lslguy/32/5813_2.png) [@LSLGuy](https://boards.straightdope.com/u/LSLGuy)\ **Post date:** [January 5, 2025, 5:01pm UTC](https://boards.straightdope.com/t/i-dont-understand-the-account-setup-on-my-ira-rather-long-im-afraid/1011009/33 "2025-01-05T17:01:00Z")
There’s a small chance our OP is in a “direct indexing” system. Which _can_ be delivered cost effectively by the right folks. But far more likely he’s on the “random churn” program. ---
**Author:** ![bobsmom101](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bobsmom101/32/2867_2.png) [@bobsmom101](https://boards.straightdope.com/u/bobsmom101)\ **Post date:** [January 5, 2025, 5:11pm UTC](https://boards.straightdope.com/t/i-dont-understand-the-account-setup-on-my-ira-rather-long-im-afraid/1011009/34 "2025-01-05T17:11:42Z")
Punchline of an old joke. The Motley Fool article is 10 years old but still relevant: ["Where Are the Customers' Yachts?" | The Motley Fool](https://www.fool.com/investing/general/2014/02/21/where-are-the-customers-yachts.aspx#:~:text=Six%20decades%20ago%2C%20Fred%20Schwed,where%20the%20customers)’%20yachts%20were. ---
**Author:** ![Roderick\_Femm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/roderick_femm/32/14875_2.png) [@Roderick\_Femm](https://boards.straightdope.com/u/Roderick_Femm)\ **Post date:** [January 5, 2025, 8:04pm UTC](https://boards.straightdope.com/t/i-dont-understand-the-account-setup-on-my-ira-rather-long-im-afraid/1011009/35 "2025-01-05T20:04:19Z")
> [@LSLGuy](#): > > There’s a small chance our OP is in a “direct indexing” system. Which _can_ be delivered cost effectively by the right folks. But far more likely he’s on the “random churn” program. Perhaps so. A brief segment of an email recently from my financial advisor, at the end of the transfer: > This account [I believe he means my account] follows an index and will hew to its benchmark more closely because of how we optimize it than a portfolio of mutual funds. I will be keeping an eye on the monthly trades, now that there is a better way to do that. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [January 5, 2025, 8:11pm UTC](https://boards.straightdope.com/t/i-dont-understand-the-account-setup-on-my-ira-rather-long-im-afraid/1011009/36 "2025-01-05T20:11:54Z")
What advantage does this approach offer versus just investing in the equivalent index fund or index ETF? ---
**Author:** ![Munch](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/munch/32/5281_2.png) [@Munch](https://boards.straightdope.com/u/Munch)\ **Post date:** [January 5, 2025, 11:59pm UTC](https://boards.straightdope.com/t/i-dont-understand-the-account-setup-on-my-ira-rather-long-im-afraid/1011009/37 "2025-01-05T23:59:55Z")
> [@Roderick\_Femm](#): > > I will be keeping an eye on the monthly trades, now that there is a better way to do that. Keep an eye out for transaction fees. If there are ANY, it’s time to start asking questions. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [January 6, 2025, 12:05am UTC](https://boards.straightdope.com/t/i-dont-understand-the-account-setup-on-my-ira-rather-long-im-afraid/1011009/38 "2025-01-06T00:05:05Z")
> [@Railer13](#): > > This is exactly why I didn’t accept an offer from Merrill Lynch to manage my money after retirement. I looked at the yearly statement of a fellow retiree who had her money with Lynch, and each month there were multiple trades of stocks, and each of those trades generated a charge for the customer. That’s the adviser, not ML. My account has a couple of trades a year, all done after we meet with my adviser, with an explanation of why the trade makes sense. Plus whatever I sell for my RMD. And I make money, and, more importantly at my age, I make income, more than I need. > [@Roderick\_Femm](#): > > I do get a monthly statement, by the way. I have 11+ pages of individual securities in my portfolio, so I’m guessing somewhere around 150. My statement has multiple lines per security, plus plenty of summaries. Mine is over 11 pages, and I have nowhere near 150 securities. I haven’t counted, but maybe 20 or so. So, look closer. And while I have you, I have the same dislike of spending a good chunk of time on investing as you do, but I’m happy to meet with my adviser - call or Zoom these days - at least twice a year, and more often if I need something. It’s a good time for them to explain what they are doing to you, and to touch base on if your investment goals have changed. As for the gains/losses, some months you lose, some months you win, but it doesn’t mean anything if your account is generating enough money to live on. For us retirees it is all cashflow, not investment amount. ---
**Author:** ![Railer13](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/railer13/32/9742_2.png) [@Railer13](https://boards.straightdope.com/u/Railer13)\ **Post date:** [January 6, 2025, 1:03am UTC](https://boards.straightdope.com/t/i-dont-understand-the-account-setup-on-my-ira-rather-long-im-afraid/1011009/39 "2025-01-06T01:03:38Z")
> [@Voyager](#): > > That’s the adviser, not ML. Understood, but if that’s the adviser I was going to work with, I certainly didn’t want those services. > [@Voyager](#): > > I’m happy to meet with my adviser - call or Zoom these days - at least twice a year Do you pay your adviser a fee based on a percentage of your assets, or are you charged by the time you spend with your adviser? ---
**Author:** ![Roderick\_Femm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/roderick_femm/32/14875_2.png) [@Roderick\_Femm](https://boards.straightdope.com/u/Roderick_Femm)\ **Post date:** [January 6, 2025, 3:30am UTC](https://boards.straightdope.com/t/i-dont-understand-the-account-setup-on-my-ira-rather-long-im-afraid/1011009/40 "2025-01-06T03:30:49Z")
OK, I counted. There is one entry per trading code, and even when the name is the same, which only occurred twice, they have different codes and different prices per share, so I am counting them. It came to 215. > [@Voyager](#): > > It’s a good time for them to explain what they are doing to you Freudian slip? If they are doing something _to_ me, it strikes me they would be unlikely to explain it. Anyway, I have received the message, and as I said I will be more attentive going forward. [Previous page](https://boards.straightdope.com/t/i-dont-understand-the-account-setup-on-my-ira-rather-long-im-afraid/1011009.md?page=1) [Next page](https://boards.straightdope.com/t/i-dont-understand-the-account-setup-on-my-ira-rather-long-im-afraid/1011009.md?page=3)