Who Has Up To 10% Commission ?

[scagnt83]

Re: Financial Advisors and Mutual Funds

You assume that all mutual funds have advisor management fees (not true, but we'll give you this for now). If you do pay this fee, then you do not usually pay any buy or sell fees. You can then take 10% out of the fund and pay less management fee. There would be no 'waiving' of the fee, it just doesn't exist.

Actually even no load funds have fees and costs involved. Even a fund managed totally electronically will have fees and costs involved... granted they might only be 25 or 50bps.. but they are still there and are associated with the fund for its life.

Plus, most no load funds do not keep up with most funds that have a sales fee. This is because they usually have no manager or just a part time manager.

Some fees that can be associated with "no load" funds:
Redemption Fee
Exchange Fee
Account Fee
Purchase Fee
Management Fees
"Other"/miscellaneous fees

There is not a mutual fund out there that has no expenses involved at all!

 

[Crabcake Johnny]

Index funds. Lower fees, typically better returns as opposed to trying to pick a "winner" and low portfolio turnover rate which minimizes your capital gains hit.

 

[scagnt83]

Re: Financial Advisors and Mutual Funds

The thing is, annuities are a great investment for the right thing. It's this type of selling that gives annuities a black eye in a lot of peoples opinion. Why not sell on the merits of an annuity, rather than some inaccurate, half-baked managers talking point sales cheat sheet?

Talking to a client and educating them about the fees involved with various investments is not some half baked way to sell.

Management fees and sales fees are one of the biggest destroyers of retirement wealth in this country.

By reducing your fees just 1% on a $100K account would make a difference of over $100K over 20 years!!

This is one aspect that makes indexed products so appealing, they can have enhanced growth over anything else that guarantees principle and they can rival securities products after you account for fees and taxes

 

[djs]

Re: Financial Advisors and Mutual Funds

Actually even no load funds have fees and costs involved. Even a fund managed totally electronically will have fees and costs involved... granted they might only be 25 or 50bps.. but they are still there and are associated with the fund for its life.

Plus, most no load funds do not keep up with most funds that have a sales fee. This is because they usually have no manager or just a part time manager.

Some fees that can be associated with "no load" funds:
Redemption Fee
Exchange Fee
Account Fee
Purchase Fee
Management Fees
"Other"/miscellaneous fees

There is not a mutual fund out there that has no expenses involved at all!

The original statement was directed at the financial advisor fees. If you want to start talking about all the fees and truly educating clients, then you also have to talk about the annuity fees, which can be very substantial as well.

I don't think things like a 12b1 fee make an investment suitable or not suitable by itself. Sales charges, surrender charges, account fees, etc, which can be substantial and can speak to how long money is invested in any particular investment, does speak to suitability.

Talking to a client and educating them inaccurately on the product you are selling against is a half-baked way to sell. Again, annuities are a great product, but you have to sell them because they are the right investment for the client, not because you stack up a bunch of fees on one side and not on the other, though they exist on both.

The way this laundry list of the evils of 'fees' was presented, it was to confuse the client, not educate.

I'll gladly show a client why investment advisor fees may be the wrong thing to pay, especially with limited funds invested. That doesn't make an annuity an immediately correct and suitable choice though.

Dan

 

[scagnt83]

Re: Financial Advisors and Mutual Funds

The way this laundry list of the evils of 'fees' was presented, it was to confuse the client, not educate.

There was no "special" way that I presented those fees. I just listed them. And I listed them on a forum full of agents, not clients.

Furthermore I stated that no load funds usually have an expense of at least 25bps.. even up to 50bps.
SO TELL ME HOW CLEARLY STATING THE AVERAGE EXPENSE IS MISLEADING OR CONFUSING ANYONE!!

The reason I posted the info on no load funds is because most people (even many agents) think that there is no expense involved at all. I was only illustrating that no load basically just means no sales fee. It was a post merely to educate, not coerce.

Anytime you give a list of fees without the expense of the fee (or average expense) you are not fully disclosing all relevant info to your client. This should go without saying and I resent the suggestion that this is what I practice.
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The original statement was directed at the financial advisor fees. If you want to start talking about all the fees and truly educating clients, then you also have to talk about the annuity fees, which can be very substantial as well.

If your speaking of VAs yes. But they are a breed of their own. The M&E charges can certainly take a toll when compounded by the MF expenses.

And yes, there are some fees and such built into a fixed annuity, but you still get the stated rate, the fees are built into the rate. (at least in any decent product).

Many naysayers like to point out how a FA or PI has all of these "hidden" charges that affect performance. And its true, there are charges (not really hidden) that do affect the contract, but it affects the contract and its stated rate.

If you compare the illustration to the security products projected returns then barring taxes, you dont have to compensate for anything for an accurate comparison. For the security product you will have to reduce that yearly return by whatever the expenses are.

I dont sell annuities exclusively at all. I evaluate the situation and provide the most appropriate product (being registered allows me to freely do this).
But I make myself and my clients well aware of any fee or taxes involved and how that will affect the outcome. Its my fiduciary duty to do so.
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I don't think things like a 12b1 fee make an investment suitable or not suitable by itself. Sales charges, surrender charges, account fees, etc, which can be substantial and can speak to how long money is invested in any particular investment, does speak to suitability.

I'll gladly show a client why investment advisor fees may be the wrong thing to pay, especially with limited funds invested. That doesn't make an annuity an immediately correct and suitable choice though.

Everything about a client speaks to suitability.

A fee in and of its own does not make a product suitable or not. But when fees affect performance to the point of fixed products being competitive with the returns of the variable product, then its a risk to reward issue, and that can be critical.


One of the major problems in the past with retirement planning theories is that advisors have not accounted for the fee structures of the products they place clients in.
They illustrate an 8% return and how X amount of money per year will get you to your goal at that 8%. But they didnt account for the 2% in fees the client was paying making it a 6% net; thus leaving the client with insufficient assets.

Fees should never be used as a scare tactic, but certainly should be taken into account.


The only effective way to compare products returns is to compare the net returns. Taking fees and taxes into account does this.
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The original statement was directed at the financial advisor fees.

Fair enough. I really should have quoted a few other posts in addition to yours, a few people had mentioned the no load funds previous to your quote about advisor fees.

Im not trying to bash any particular type of product in my posts. I sell, mutual funds, EIAs, VAs, PI, bonds, stocks, ETFs, and even CDs.

We can both agree on the fact that no one product is always the right thing for everyone.

I wasnt so much defending annuities as I was pointing out the importance of accounting for fees inside of any investment that affect the net return.

 

[djs]

Fair enough.

Dan

 

[pcwest]

I almost hate to get involved in this conversation but did anyone mention the Turn over Ratio?

Fund Managers who do not pick the right stocks can really do the fund damage by rolling over the fund by buying and selling stock over a year and we really never know what that will amount to on a year to year basis.

Not to mention the potential fees.

Apples and Oranges
Mutual funds and VA's are investments
Fixed and FIA's are savings programs

Have a great week!

 

[NPCOACH]

Re: Financial Advisors and Mutual Funds

The original statement was directed at the financial advisor fees. Dan

Nice try - but you are wrong. Read my original post. I mentioned advisor fees in one sentence and mutual fund fees in a seperate sentence. Two sentences - two distinct assertions.

Your continued deliberate misrepresentation of my post destroys your credibility. Your "blackeye" remark is insulting. When you accuse fellow forum members of deceitful sales practices, you can expect a vigorous backlash.

Be a man, apologize, and try to begin salvaging what is left of your reputation.

 

[djs]

But the statement about fees in the second paragraph was just wrong. You can change the meaning all you want.

The paragraph was:

Most annuities allow access to at least 10% of your account free from charges. This works well for clients that are withdrawing interest only or merely taking RMDs. Again, not aware of any mutual funds or advisors that let you waive fees on 10% of your account.

I stick by my statement. If you remove 10% of the fund, then the fees go down by 10%, even on a mutual fund. How hard is that to understand.

Can you clarify your point. I'd like to learn something.

Dan
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Oops, almost forget to mention, advisors, as you reference in the paragraph, don't charge these 'evil' mutual fund fees that you are referring to. They charge advisor fees. Are you saying you are not referring to the fees advisors charge even though you mention them in the sentence?

Dan
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By the way, if you are trying to get me to say the fees are excessive, don't worry about that, I do agree.

Dan

 

[NPCOACH]

But the statement about fees in the second paragraph was just wrong. You can change the meaning all you want.

The paragraph was:



I stick by my statement. If you remove 10% of the fund, then the fees go down by 10%, even on a mutual fund. How hard is that to understand.

Can you clarify your point. I'd like to learn something.

Dan
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Oops, almost forget to mention, advisors, as you reference in the paragraph, don't charge these 'evil' mutual fund fees that you are referring to. They charge advisor fees. Are you saying you are not referring to the fees advisors charge even though you mention them in the sentence?

Dan
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By the way, if you are trying to get me to say the fees are excessive, don't worry about that, I do agree.

Dan

Dan,
You say that you would like to learn something but it doesn't appear you are up to the task. I wrote about advisor fees and in another sentence I wrote about mutual fund fees. I'm not sure why you are having trouble grasping that these are two different references. Try hooked on phonics.

Second, I never wrote that financial advisors charge evil mutual fund fees. Now you are just making stuff up in an attempt to keep from looking stupid. It didn't work.

Third, taking 10% out of a mutual fund might reduce the fees for the year if you did it on the first day of the year. However, that would not be true on any other day of the year. A 10% free withdrawal from an annuity is a 10% free withdrawal regardless of which day of the policy year it is taken.

Fourth, I am not trying to get you to see that the fees are excessive. You flatter yourself to think I care what you think about mutual funds.

However, when you accuse me of being a "black eye" on the annuity industry and imply that I use deceptive sales practices - I have a problem. You don't know me or how I sell. I'm not sure why you chose to libel me in this forum. But if you do it again, I will take appropriate action.

Govern yourself accordingly.