For the most part, there is a reason as to why a Bank or Brokerage firm puts a mutual fund in your account – FEES. Whether it’s through being paid directly by offering up a propriety product or through revenue sharing by allowing another fund family to participate on their platform, Brokerage firms have found a way to legally double dip on your account. The adviser makes his commission or asset management fee for managing the account, and then the institution makes its fee from the mutual fund. This is a very lucrative, but far from objective practice endeavored upon by most large brokerage firms. Most clients have no idea what is going on. This is because the conflict of interest is only revealed to them in tiny print on the back page of a prospectus, which is rarely read. If the firm does have proprietary funds, many hide the affiliation by naming the fund family something that is hard to trace back to the parent company.
Category Archives: Fiduciary Standard
The Retirement Gamble
Over the past week, I have had several clients mention the recent PBS Frontline special, “The Retirement Gamble” (Retirement Gamble). I have also read several negative comments from my industry regarding the piece. After finally finding the time to watch it this morning, I believe it was honest and well done. It is refreshing to see PBS do a piece that includes two of the three messages we try to relay to investors every day.
- A Fiduciary places investors interest before their own
- Fees steal returns and are one of the most important determinants in investment outcomes
Standard Distinction
One of the things we harp on at our firm is abiding by a fiduciary standard. This standard compels us to always act in the best interest of our clients. In our business, that means recommending investments that we believe will best achieve a client’s goals regardless of how transacting in those investments effects our bottom line. As professional purveyors of advice we believe it would be disingenuous, if not downright wrong, to provide anything but objective guidance. We also believe it sets us apart from large wire house brokers and advisors who are not held to that same standard. Read more