Founded in 1992, Jackson Wealth Management is an independent, fee-only investment advisor. Founder George P. Jackson has been the CEO/CIO of the firm since its inception with the goal of delivering value to his clients and his associates. 

Securities Offered through Triad Advisors, LLC. Member FINRA/SIPC
Advisory services offered through Jackson Wealth Management, LLC. 
Jackson Wealth Management, LLC is an affiliate of Jackson Retirement Planning, Inc.
Jackson Wealth Management, LLC is not affiliated with Triad Advisors, LLC.

755 Primera Boulevard, Suite 1001

Lake Mary, Florida 32746

Revamped ETF Model Portfolios

October 25, 2017

Wednesday, October 25, 2017

 

Dear Friends,

 

TD Ameritrade’s new ETF (Exchange Traded Fund) Market Center – Commission-Free ETF trading

Your custodian, TD Ameritrade (“TD”), has revamped their commission-free ETF trading platform.  TD just yesterday extended the time for us to convert to the revamped platform until January 19, 2018.  After that date TD will impose a $6.95 commission on the 84 ETFs that were commission-free on the legacy platform, but not commission-free on the revamped platform.

 

The Legacy platform offered 101 commission-free ETFs, the Revamped program includes 296 commission-free ETFs from 8 widely respected ETF issuers with 77 Morningstar categories.

 

Please do not worry about this change.  We will do everything we can to:

  • Minimize any income taxes from trading non-qualified accounts,

  • Minimize the number of $6.95 commissions that you will pay, and

  • Minimize the internal ETF expense ratios.

 

How we will adjust to this change:

We designed our Models 1,3,5,7 and 9 using TD’s commission-free ETF platform.

 

We will now have 5 additional model portfolios.  We will call them Legacy and Revamped.  E.g. We will have Model portfolio #5 Legacy and #5 Revamped.  We will have 2 models for our models 1,3,5,7 and 9.

 

For qualified accounts (IRAs, etc.) we will, before January 19, 2018, trade your 1,3,5,7 and 9 model portfolios into the new 1,3,5,7 and 9.  For example, if you hold model portfolio #9 in your IRA account we will trade Model portfolio #9 Legacy into #9 Revamped.  There will be no commissions for this change.  Since the ETFs are inside of a qualified account, there will be no capital gains generated by these trades.  Since, all of the ETFs in your current Legacy models are no longer available in the revamped TD program, we will be selling all of your ETFs in your Legacy model portfolios and replacing them with all new ETFs that are included in the revamped TD platform.

 

For non-qualified accounts (non-IRAs, etc.) we will maintain the current models 1,3,5,7,9 calling them Legacy model portfolios.  We do not want to trade these Legacy models into the revamped models, since that will trigger taxable gains to you.  Over time, as we sell positions in Legacy model portfolios we will buy commission-free ETFs from the Revamped ETF program.  After January 19, 2018 sell trades will incur a $6.95 commission, however, we believe it is in our clients’ best interest to pay $6.95 rather than a large capital gains tax.

 

Net Expense of the ETF model portfolios.

We believe that expenses and commissions matter.

 

We have designed out model portfolios 1,3,5,7 and 9 (both the Legacy and Revamped versions) to be core, broad-based, well-diversified portfolios using ETFs with low expense ratios and commission-free trading. 

 

The new expense ratios of the entire portfolio of each of the model portfolios is listed below:

Note:  Overall model portfolio net expense ratios may change dependent upon future trading into more or less expensive ETFs.  JWM charges an annual asset-based management fee to manage their model portfolios for clients which is in addition to the fund expenses listed above.

 

Compare our model portfolios to the average mutual fund expense ratios:

Large-Cap Stock Funds: 1.25%
Mid-Cap Stock Funds: 1.35%
Small-Cap Stock Funds: 1.40%
Foreign Stock Funds: 1.50%
S&P 500 Index Funds: 0.15%
Bond Funds: 0.90%

Source:  https://goo.gl/viqRcZ

 

 

Any questions?

Call or email your wealth advisor:

 

Michael McGahan 321.249.6690 michael@jacksonwm.com

Scott Reeder 407.995.6102 scott@jacksonwm.com

Matt Jackson 321.249.6670 matt@jacksonwm.com

George Jackson 321.249.6680 gj@jacksonwm.com

 

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