- 477
I'm not sure if you know this, but you can do the right thing for your client and still get paid. And BTW the American funds pay 3.5% at $100,000 not 4%
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Broker Dealer Suggestions
- Thread starter just some f.e.llow
- Start date
I'm not sure if you know this, but you can do the right thing for your client and still get paid. And BTW the American funds pay 3.5% at $100,000 not 4%
- 11,512
No... American Funds has a sales charge of 3.5% at $100,000... and then 2.75% is paid to the B/D.
See page 23 of this prospectus for CWGIX - AF. Capital World Growth & Income:
https://www.americanfunds.com/pdf/mfgepr-933_wgip.pdf
(Okay, I'm nitpicking... but it's a good opportunity to post a link to a prospectus for the OP.)
See page 23 of this prospectus for CWGIX - AF. Capital World Growth & Income:
https://www.americanfunds.com/pdf/mfgepr-933_wgip.pdf
(Okay, I'm nitpicking... but it's a good opportunity to post a link to a prospectus for the OP.)
- 477
I really dont pay attention to the commission, I was pointing out the sales load, I figure the the commission is always slightly lower than the load. Most of my business is in C shares because 99% of my clients are over the age of 65 and don't like the idea of paying a load up front and like the 1 year surrender.
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- 2,045
Plus you like that they get to pay you over 1% annually for you to toy around with how much risk to expose them to.
- 11,512
Client preference aside, if they are in C-shares for over 5 years... then it's an unsuitable share class and they should've been in A-shares from the start, or be in a wrap/advisory platform instead. Comparable fees, but difference in advisor fiduciary vs suitability duty.
- 711
This. This is great advice.
I'm a little late to the game here (been on vacation), but there are a few points I'd like to make. As far as BD's go, I'm a fan of ONESCO. I know there's a difference on the Ohio National Life side when a resident of Ohio. But I didn't know that was the case if you are just going with ONESCO. DHK may know for certain since he mentioned it. So the rules I have for ONESCO may be different for you since you live in Ohio.
As for their payout, I think their minimum is either 70% or 75%. I do believe they have a $10k minimum in GDC (gross dealer concessions) and a $20k minimum to avoid a fee, but life commissions on Ohio National Life products count toward that minimum. I know DHK used 35% as an example, but I don't know of any independent BD's who pay that little. I'm not saying there aren't any out there. I just haven't seen them. Usually low payouts like that are with the captive places.
Something else to consider, the cost of E&O increases when you have a securities license. A few years ago ONESCO made a change and you are now required to use who they say. The cost is just under $2,000 (for those with 6 63 & 65). They also have a $300 annual technology fee. Then there are the securities registration fees each year. So you have to decide if dropping $3,000-$5,000 in expense each year is worth it.
As for the 403b market, you can't just walk into a school, hospital or municipality and enroll people. Providers (mutual fund, VA and FIA companies) are generally approved on an annual basis. Many of these companies are captive. DHK mentioned Valic. I'm sure there are guys and gals killing it at Valic. I have a friend who has been there for 30 years and it's as if he is starting over every year. He has minimum production requirements and has to do all kinds of mind numbing tasks to satisfy his bosses. The reason I point this out is because the idea of being in this business for 30 years and not being able to sit back and enjoy the fruits of your labor is maddening. Imagine building $200k, $300k or $400k in annual GDC (all based on trails) and still having someone riding your butt because you aren't bringing in $4 million in NEW deposits (rollovers) for the year. Even threatening your job. That's what you deal with in a captive position.
It can be hard for an independent to get into the 403b market. So unless you have a company who has a pay slot in a school, hospital or municipality and allows for you to enroll people, you may find the 403b market isn't all that it's cracked up to be. At least not for someone wanting to remain independent and not captive.
If I had it to do all over again, I would have either formed my own RIA or gone with a local RIA as an IAR and not fooled with the 6 & 63. I can still do it, but I have a decent amount of trails I'd lose if I did so.
I don't say any of this to try and discourage you from getting your securities license. I was a life only guy many years ago and added the securities license in 1998. I did it as an independent and moved to a few different broker dealers over the years. I've been with ONESCO for 7 years now and have no intentions of leaving unless I go the RIA route. However, my business model has really changed over the last decade and now Medicare has become my larger source of income. The only reason I still have my securities license is because I still have a decent amount of trails and I pick up some money here and there. If and when my annual GDC drops below maybe $20k, I may be done with it. At that point I would likely find a local RIA and see about joining up with them just to hang onto the 65 and still be able to do some managed accounts.
Best of luck.
- 477
- 11,512
Uh... hello. I've had a Series 7 & 66 and helped grow a book of investment business from about $11m to about $60m before I left the credit union at the end of 2007. It was about a 3 year period.
So yeah, I can make comments about mutual fund share class suitability.
Your assumption is nullified.
My B/D would require that we give a full disclosure and let the client choose. However, I always advocated for the A-shares over C-shares depending on time horizon to have the funds be invested.
So yeah, I can make comments about mutual fund share class suitability.
Your assumption is nullified.
My B/D would require that we give a full disclosure and let the client choose. However, I always advocated for the A-shares over C-shares depending on time horizon to have the funds be invested.
- 477
I can honestly say I have no idea what point you are trying to make. The fund company pays out 1% and I get a percentage of that, so its not over 1%. Again I'm not sure what you mean about toying with risk but I do know if I don't do a good job they can leave after 1 year with no penalty.
Just curious what do you market? You seemed to really get offended when I made the comment do whats in the best intrest of the client and you will be fine, your dumba$$ response was ----you want him to work for free?
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