Edward Jones IRA and Roth IRA Review

What you need to know about Edward Jones' IRA offerings

Edward Jones is a full-service brokerage that offers both traditional and Roth individual retirement accounts (IRAs). If you are considering opening an IRA with the firm, this is what you need to know, including the investments and services it offers, and the fees involved.

Edward Jones Overview

Edward Jones was founded in 1922 and is based out of St. Louis, Mo. One of the largest broker-dealers in the United States, it serves over seven million investors and has more than 49,000 financial advisors.

Key Takeaways

  • Edward Jones is a full-service firm suited for investors who need a financial advisor to impart investing advice.
  • It offers traditional and Roth IRAs via commission or fee-based accounts.
  • Make sure you understand how fees and commissions work before opening an account.
  • Investing options include stocks, bonds, mutual funds, and exchange-traded funds (ETFs).
  • Whether or not Edward Jones is the right choice depends on the quality of the advisor and their relationship with you.

Full-service brokers such as Edward Jones employ financial advisors who offer advice to investors, for which they pay. This differs from discount brokers where investment decisions are made by investors who do the research and sell and buy securities through an online account on their own. As a result, fees are much lower at discount brokers, such as Fidelity Investments and Charles Schwab Corporation.

Opening an IRA at Edward Jones

Investors who want to open a traditional or Roth IRA at Edward Jones must find a local financial advisor. This should not be difficult considering the company has branches in 50 states typically staffed by one advisor and an administrator.

To prepare for the first appointment, investors should be prepared to explain why they are investing. They should also collect statements to show the advisor and prepare questions. The Edward Jones financial advisor will assess the investor's needs and create a tailored investment plan.

Choosing a Traditional vs. Roth IRA

A traditional IRA provides a tax deduction and tax deferral on any gains. When you retire, withdrawals are taxed based on your income tax bracket. A Roth IRA does not provide an immediate tax deduction, but all gains and withdrawals are tax-free. The Edward Jones financial advisor will help you determine whether a traditional or Roth IRA is better.

Edward Jones does not offer online trading, so to buy or sell securities you will have to call your advisor.

In 2022, investors can contribute up to $6,000 to a traditional or Roth IRA. An extra $1,000 catch-up contribution is allowed for investors ages 50 or older. These numbers are unchanged from 2021.

Depending on the tax filing status, traditional IRA contributions can be deductible even if you contribute to an employer-sponsored retirement plan. For example, single tax filers that are covered by a workplace retirement plan can deduct full contributions if their modified adjusted gross income (MAGI) is $68,000 or less in 2021, up from $66,000 in 2020.

Not every investor is able to contribute to a Roth IRA. As of 2022, single tax filers can contribute the full amount if their MAGI is less than $129,000, and contributions are phased out once it reaches $144,000, up from a range of $125,000 and 140,000 in 2021.

Investment Lineup

IRAs can be established on a commission or fee-based basis. Since Edward Jones is a full-service brokerage firm, its financial advisors offer many different investment options. Stocks, bonds, ETFs, and mutual funds are among the choices available to clients. Financial advisors can help determine which investments are suitable for retirement accounts based on the client’s investment objective and risk tolerance.

The Advisory Solutions investment program is the Edward Jones managed account available to clients. These accounts charge an annual advisory fee instead of commissions. The Advisory Solutions have several asset allocation models that contain a broad range of vetted mutual funds and ETFs.

The Bridge Builder proprietary mutual fund lineup is exclusive to the Edward Jones Advisory Solutions program. Eight different sub-advised funds are available in a range of asset classes, including domestic stock, international stock, and fixed-income investments.

The Bridge Builder Core Bond Fund (BBTBX), for example, has an expense ratio of 0.14% and as of Dec. 16, 2021, had an annual one-year average return of -1.00%. This is slightly better than its benchmark Bloomberg U.S. Aggregate Bond Index (the former Bloomberg Barclays Aggregate U.S. Bond Index) return of -1.06% in the same period.

Fees and Commissions

Traditional and Roth IRAs at Edward Jones have a $40 annual account fee. However, clients with total assets above $250,000 are exempt.

Commissions in the IRAs can vary, depending on the securities purchased. Stocks and ETF trades result in a commission of about 2%. Mutual fund commissions are dependent upon the share class. A-share mutual funds have a large up-front fee and C-share funds have a level fee structure.

The Advisory Solutions program requires a $25,000 account minimum and charges an annual fee ranging from 0.09% to 1.35% based on the amount of assets under management. The more you have, the lower the fee. You'll pay fund fees in addition to the annual program fee.

Edward Jones Versus the Competition

Edward Jones is comparable to other full-service brokerage firms such as Morgan Stanley or Merrill (formerly Merrill Lynch). The real comparison would be the relationship developed by the financial advisor and the client.

Commissions and the advisory investment programs are also similar to other full-service brokerages. However, the annual IRA account fee at Edward Jones is lower. For example, Morgan Stanley charges $75 per account for clients who enroll in e-delivery of documents and statements for their account(s), but it is waived for clients with at least $1 million in total assets with the firm.

The Bottom Line

Overall, Edward Jones is a viable option for investors who are looking to open a traditional or Roth IRA at a full-service broker-dealer and willing to pay fees and commissions for receiving investment advice from an advisor. The most important factor is the quality of the financial advisor and the relationship with the client.

Article Sources

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  5. Internal Revenue Service. "Income Ranges for Determining IRA Eligibility Change for 2021." Accessed Dec. 22, 2021.

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  8. Morningstar. "Bridge Builder Core Bond (BBTBX)." Accessed Dec. 22, 2021.

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  12. Edward Jones. "Edward Jones Advisory Solutions Fund Models." Accessed Dec. 22, 2021.

  13. Edward Jones. "Edward Jones Advisory Solutions Fund Models Schedule of Fees," Page 1. Accessed Dec. 22, 2021.

  14. Morgan Stanley. "Morgan Stanley Wealth Management Schedule of Miscellaneous Account and Service Fees," Pages 1, 4. Accessed Dec. 22, 2021.