Can I move funds from a managed account, not pay fees and let the money grow?

Q: My elderly mother has about $100,000 in a "managed account" at a bank trust department. She is angry that they take fees from her account, but it's a managed account. She wants to move it out of the bank, but she wants to NOT pay fees, and she wants her money to grow. Is there such an animal? She is of course in RMD status so she's never putting money INTO the account; she's forced to take money out.

She is a first generation Mexican immigrant, so she doesn't understand about investments. She never had money to save. This is all the money she's got until the day she dies. I understand her frustration, I really do. What can I do for her? I am not investment savvy myself. I work in a bank trust department and one of the portfolio managers offered to help but all he did was suggest that I look into either Vanguard or Fidelity. I don't want to have to trade. Do you have any suggestions? What can I get her into where she won't lose her shirt? She has to take her RMD each year so it has to be somewhere that her money isn't tied up.

A: I understand why your mother is upset at the fees she's being charged -- even if they don't "do anything" to change her account. You didn't say what level of fees she's paying, but it's annoying to her, I'm sure. But she's paying fees to get investment management,and sometimes the best management advice is to sit with what she owns.

Look, she could put it all into safe CDs or US Treasury bills, paying about 2% these days, and then she'd be complaining about low returns!! If she's invested in anything other than these safe, low-yielding CDs or a money market fund, then she's taking risk. If she's invested in stocks and the stock market goes down, she'll have more to worry about than fees; she'll lose principal. And if she's invested in bonds, and interest rates rise, she'll lose principal value (even on the safest bonds) and then she'll have more to worry about than fees.

So, if you get my drift, this requires a pretty good discussion of what's most important -- not LOSING ANY money, or taking a bit of risk to make the money grow to beat inflation, which is also a valid consideration. I typically balance these two extremes by having some of one thing (equities) and some of another ("chicken money'). That way you can't be entirely upset, no matter what the market does.

And make no mistake, depending on her risk tolerance and time horizon, there will be times to be upset no matter what strategy she picks. So it's best to always have something you can be grateful for -- i.e., some stocks, good in a bull market, and some safe money, good when everything is crashing around you.

Now, as to WHERE you put that investment money, it's important to know exactly how much you're paying in fees. You can get mutual funds (and advice with that amount of money) at Vanguard or Fidelity -- and pay less than one-half of one percent a year. So if she's paying fees AND commissions on the purchase and sale of stocks, she might want to meet (with you) at a Fidelity office. One thing to consider: you will probably have to liquidate the account (ask Fidelity) in order to transfer it and move into their mutual funds. And that would involve more commissions!

In any case, since this is an IRA account there will be no restrictions on the required minimum withdrawal -- even if you choose to put a portion in CDs in a bank. And, of course, there are no withdrawal restrictions on mutual fund withdrawals. And, yes, you can have IRA accounts at more than one financial institution; just be sure you calculate the required withdrawals based on the total value of all accounts. You can then take those withdrawals from one, or more, of the accounts.

Terry Savage is a registered investment advisor and the author of the newly published The Savage Number: How Much Money Do You Need To Retire? (256 pages, Wiley, $24.95).