How Expatriate Americans Can Utilize Raymond James Financial – Fairly

One of the reasons I wrote my book, Millionaire Teacher, was to protect expatriate Americans from firms like Raymond James Financial. 

The book became an international bestseller, spreading the message that most financial service firms were treating their clients like mushrooms—kept in the dark and covered with… smelly stuff.  But expatriate Americans can use Raymond James Financial to their benefit, and I want to show you how.

Clearly, I targeted Raymond James in my book – and rightly so. 

With silver tongues, their reps ask about their clients’ families, bring glossy charts showing non-properly benchmarked past performances, while gouging their clients in hidden fees.   The expression, “properly benchmarked past performance” might sound complicated, so let me explain:

If you’re a 30 year old with 20% of your money in bond funds and 70% in world stock market funds, then an advisor must compare your returns to the equivalent indexed benchmark.  For example, he or she would need to compare your portfolio with the results derived from a portfolio comprised of a 20% bond index, blended with 70% in a world stock index.  Doing otherwise, is misleading.  

Rarely do Raymond James reps offer low cost indexed products because they get paid less for doing so.  And sometimes, they take the cheeky option to double-dip:  buying their clients actively managed mutual funds (which are more expensive) while charging wrap fees as high as 1.75% to do so.  This ensures that they get paid twice at their clients’ expense.  Yeah, we’re on to you James B!

Having said that, you could still use Raymond James without catching their self-serving wrath:  in the background lies an ability (should they choose) to buy extremely low cost, Fidelity index funds for their clients… 

How cheap are these funds?

These funds rival Vanguard’s low cost options.  They’re among the world’s cheapest.  And you could buy them through your friendly, roaming Raymond James rep.  No, they won’t willingly sell you these funds; you’ll have to insist.  And don’t let them slap you with an annual wrap fee for their service.  These folks will be compensated for their assets under management.

Here’s a sample portfolio of Fidelity indexes that you could buy, using Raymond James as your broker.  There would be NO FEES to buy these funds and NO FEES to sell them.  The following account is diversified and virtually maintenance free. 

What’s the catch?

Fidelity doesn’t make much money on these funds, so if you buy them, Fidelity wants a big commitment:  at least $10,000 invested into each fund to start.  After that, you can invest much smaller, regular sums which Raymond James could facilitate for you.  If you don’t have $10,000 to get started with a single fund (or $30,000 to build the completed portfolio above) then start saving.  Once you have your first $10,000, ask your rep to buy you one of the three funds listed above.  When you save your second $10,000, buy the next fund.  Once you’ve established a position in each fund, you can start adding very small regular sums on a monthly basis, should you choose. 

Just remember to stand your ground, and before engaging your advisor, read a copy of Millionaire Teacher (or one of the other books I recommend at the top of my home page).  You’ll be glad you did. 

 





Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School (2nd Ed. Wiley 2017) and The Global Expatriate’s Guide To Investing: From Millionaire Teacher to Millionaire Expat (Wiley 2015). My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I’m happy to comment on your questions. However, please read the Terms of Use, Privacy Policy and the Comments Policy.

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6 Responses

  1. Jeff Farrington says:

    Hi Andrew

    I have followed your story for a number of years now, and have friends who work at SAS as well.

    I have done a pretty good job at following the 'couch potato' with cheap Vanguard ETF funds. (I am Canadian, and invest in Canada).

    I am now moving to an independent school in Canada that is similar to the story above. They use an investment company for their pension fund (great western life) and the school matches my mandatory 5% contribution into the fund(s) of my choice. However, as you know, the fund company charges 2.5-3.0% for what I can do on my own for much less.

    Do you suggest the same as above?

    • Hey Jeff,

      If the school will match your contributions, then you will be making 100% on the initially deposited money. After that, your money will drag because of the fees. I suggest that you try to educate your employer. They are obviously being very generous, but they have to realize that there are much better options than paying a company 2.5% to 3% of the assets. If your company isn't interested in better educating themselves, then contribute the maximum amount that your company will fully match, and not a penny more. Then seek a cheaper option with either TD's e-Series index funds or a basket of low cost ETFs for your surplus money. Good luck!

  2. Thankful! says:

    Andrew,

    Just wanted to say thanks! I just read your book and also opened a Vanguard account before heading overseas. The school I will be working at uses Raymond James, so your insight and knowledge has been very helpful.

    • I'm thrilled to hear it! Please pass on what you have learned at your new school. As a teacher, I have a feeling you will!

      Thank you posting this!

      Cheers,

      Andrew

      • Thankful! says:

        I certainly will share what I have learned. It will be interesting to see if the rep will "allow" me to purchase index funds. We also have the option of putting the money into a savings account with Raymond James which allows us to manage the money as we see fit. Not sure if there are fees associated with the savings account or not. I am also considering a taxable Vanguard option since there are high penalties if you contribute no tax income to a Roth IRA – which I currently have through Vanguard while still living in the U.S.

        Always learning!

        • Hey Thankful,

          The taxable account with Vanguard is your best option, once you have maximized your IRA. Because index funds have very low turnover the can compound virtually capital gains free, even in a taxable account. You will only pay tax when withdrawing…and on the dividends, of course. You can see this explained in my book: pages 44-45 and page 53, point #4 under the "index funds" column.

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