Financial Advisors

Why does everyone hate on American Funds? Low fees, great track record, excellent story...

likesmart
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Because there’s better options. The days of paying a fee and getting American Funds are in the past. If this is your business model still you need to come up with the times. Every fund company has a great story, since it’s not 1980 anymore story telling has a very small part of building a good portfolio... I’m an EJ guy saying that too

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likefunny
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I’ve never been at Jones but majority of my clients have averaged +10% on a balanced g&i portfolio paying .4-.5 a year. All in. Tell me where you Best that with your fancy fee based? From what I’ve seen you don’t. I have almost 200m with AF.

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Been with Jones almost 20 years. If I could do it all over again I would have put all of my assets, client and personal, into American Funds. They outperform any fee-based portfolio Jones has ever offered, especially with withdrawal scenarios. Believe me, I have wasted countless hours doing hypos trying to find a good reason to charge clients 1.35% but never could.

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Those aren’t AF fees being high though, that’s tied to the unique needs of a small retirement plan, which are vast. I disagree with EJ1, Franklin performance and fees redefine boring. And you can’t just throw ETF’s out there in the fund company story. Most ETF shops are run by a MF company because they realize the world is changing. Can you build a great practice sitting with a lot of people and discussing American Funds? Yes. Can you build a great practice sitting with fewer clients and pitching ETF’s, or supreme picking skills? Doubt it. The edge is always to the people person helping a client meet their goals. Lots of ways to get that done

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Overall they are very good. However, they don’t have funds in several key asset classes, their funds are not at all style pure (that’s ok to a point), and their funds overlap. Investment Company of America, Washington Mutual, and American Mutual are very similar. As are AMCAP, Growth Fund of America, and New Economy. I know there are shades of grey between them, but what is the point of having multiple LV/LG funds basically do the same thing? Especially since they don’t have a pure US small or mid cap fund

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Whomever ends up with your book FA1, they are going to have a very "successful" career moving everyone to fee based

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I use them sometimes. Depending on the client. But I’ve never understood the need for storytelling. The client isn’t there to hear you regurgitate the ICA guide. They assume just by being there that you’ll choose the right investments.

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Sorry, AF is mediocre at best. They have a “solid” track record only when compared to other mediocre Funds. If you’ve used them for 20 years you haven’t done anything wrong, but you weren’t right the entire time either. Its time to get with the times, all AF is a thing of the past

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likefunny
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It’s virtually 0 work but I see where you think it would be. Meet once a year and rebalance?

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likesmart
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Become an RIA and buy F-3 shares. Can't be beat. Former EJ as well.

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Former EJ guy myself. Never really used them tho. Just curious. Seemed to be all I was trained to sell.

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Franklin.... that’s laughable their fees are much higher and performance has been awful. I would take AF over them any day. I do agree AF taxable bond funds have not been good. You can bring in Lord abbett for that part. Sales charge on LA bond funds start very low so the client doesn’t pay more. AF A shares will beat most fancy fee based models due to lower fees and solid performance, even if they perform on par with the index they will beat fee based managed money

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200m generating 500k of gross. Seems like a lot of work

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Because they have an easy story to learn, not because they are superior. After a few months and a few appointments with clients it’s obvious there’s more to building a relationship with a client than slinging American Funds. The ones still doing that are close to retirement so this will be a thing of the past before long

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T Rowe, PIMCO, Franklin, and ETFs. Post 2008 any of them hands down are better than AF. PIMCO Income has done as well as Washington Mutual over the 10 year... (PIMIX & AWSHX for anyone wanting to hypo it) All I keep hearing is how advisors have never had to apologize for AF, that’s changing. They’ve been lagging the last few years and old time advisors keep saying they’ll be fine. Underperformance losses clients, I bring new clients in all the time from competitors selling the old A share AF model. Get with the times.

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401k providers hate American Funds due to lackluster performance and/or high expense...said nobody ever. Also, just because they don’t have a mid cap fund, go elsewhere - lots of find families have a investment category that leaves something to be desired.

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They got killed/smacked around in ‘08 with their value tilt overall, and their love for financials. Fits EJ KISS model well. The fund company was so arrogant for so long, but they’ve been humbled somewhat by the flows leaving. My biggest criticism is the multiplicity of better options and the huge size of their funds, which over time hurts their return competitive profile

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Going to Morningstar to compare funds based on performance is a sorry explanation of acting as a fiduciary. Read a book

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IAR2, Care to share who is at the top? My 2 accounts that are 100% in American funds are outperforming all my other accounts

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All in all a decent fun family but their fixed-income leaves a lot to be desired. And they don't even have a mid-cap fund.

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