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Agree with Berkshire. Anytime I’ve heard this from a client, they are usually in C share mutual funds.
The overlap wasn’t created with malice and intent to hurt the client. The client will hurt themselves greater acting without an advisor than owning a portfolio with overlap. Your prospect could have owned an indexed annuity with a 20 yr surrender and 3% cap on the S&P since 2009!
It might be true. This is totally the exception...but I do have a few clients who have just stocks and a few closed end funds in their accounts.
They pay me ZERO to hold those.
I know...I know...I’m not a nonprofit agency, but again...this is not the norm, but technically it could happen.
Also they may have tenured A share mutual fund holdings...that only have the 12b-1. Maybe he’s referring to the lack of a hard line disclosure fee (as in a managed program). But even the trail is still a fee....so I would agree that he/she is not being truthful.
I rather pay commissions up front than an ongoing fee, but that’s just me. If I had extra money to invest I would buy individual stocks and CEF’s and maybe some mutual fund a shares. I’d rather just pay for it all upfront and never have to pay again
If never pay again on Class A shares includes a 0.92% internal fee from American and MFS, then you may have been the prospect I met today. 11 funds buying the same stocks. More overlap then I have ever seen, all in large cap stocks, between 23 different funds. Advisor had no idea what she was doing, just slinging funds and prospect was content.
Actually I do know of an annuity that has only been getting 3% even though it’s index to the S&P for the past 10 years.... it’s a complete piece of garbage I have been trying to replace with one of our proprietary variable annuities
We get that far too often. In every instance the client is paying far, FAR more in mutual fund expense or commissions than they would our management fee plus any additional account costs ($4.95 per trade; 10 basis points expense ratio)
It’s absolutely criminal that advisors phrase it in such a way that the client thinks they’re not paying.
Although it’s also sometimes the clients’ fault for a) being so naive, then b) still rejecting a lower management fee because they’re uncomfortable seeing a printed fee. They’d rather be knowingly ripped off and put their head in the sand than pay a visibly stated fair fee.
I’m not even complaining. I’m just amazed at the way the human brain works.
It’s possible that the person doesn’t have an account at Edward Jones and I just talk to an advisor there once or twice.