Forced Fiduciary Standards is Socialism!

[VolAgent]

IMO you would do the middle class a service by steering them away from securities. If you check the history of mutual funds, you would know that they were never meant for the middle class. Once they became available for the general public, that's when they began to lose money in earnest. The whole securities market is a CASINO (with fixed wheels) and no one should play with the money they can't afford to lose. The middle class was in a much better shape when everyone had a pension inside a group fixed annuity.

I would tend to agree.

 

[njh_lfg]

Additional info: I do not use MFs, rarely will I use any ETFs. You pay for performance.

Fee based: Buy low, sell high.... timing is key.
Commission based: buy when the account is funded so advisor gets paid.

 

[dgoldenz]

Additional info: I do not use MFs, rarely will I use any ETFs. You pay for performance.

Fee based: Buy low, sell high.... timing is key.
Commission based: buy when the account is funded so advisor gets paid.

Fee-only: Unbiased advice where buying and selling makes no difference

 

[VolAgent]

I will say, fee-only doesn't necessarily make a person more ethical. You've still got to collect fees...

 

[dgoldenz]

I will say, fee-only doesn't necessarily make a person more ethical. You've still got to collect fees...

Yes, but it at least eliminates the inherent conflict of interest of asset management.

 

[VolAgent]

Yes, but it at least eliminates the inherent conflict of interest of asset management.

Actually, makes it worse.

Depending on the setup, you have a disincentive to trade, and you have to retain assets. Advisors either eat the trade costs or pass it on. In either case, you have an incentive to reduce trading. Just as too much trading is bad thing, so is too little.

Best thing in the world, money that goes into an account, and you never have to touch. You never trade it and you never have to talk to the person. Ideal account when you go to fee based asset management.

Nothing is perfect, and anyone who tells you their system is, is lying.

 

[dgoldenz]

Actually, makes it worse.

Depending on the setup, you have a disincentive to trade, and you have to retain assets. Advisors either eat the trade costs or pass it on. In either case, you have an incentive to reduce trading. Just as too much trading is bad thing, so is too little.

Best thing in the world, money that goes into an account, and you never have to touch. You never trade it and you never have to talk to the person. Ideal account when you go to fee based asset management.

Nothing is perfect, and anyone who tells you their system is, is lying.

Why would you have a disincentive to trade if the person is charging you by the hour? There is no way in hell I'd pay someone $10k/year to "manage" a $1M portfolio. Their advice is likely no better than throwing darts at a board full of Vanguard funds. Then again, I don't trust anyone with my money but myself, and sure as hell wouldn't pay someone 1-2% a year PLUS the fees for transactions/mutual funds/etc to tell me where to put it. Those fees could add up to $1M+ over the course of 40-50 years easily.

 

[Franz Kafka]

Why would you have a disincentive to trade if the person is charging you by the hour? There is no way in hell I'd pay someone $10k/year to "manage" a $1M portfolio. Their advice is likely no better than throwing darts at a board full of Vanguard funds. Then again, I don't trust anyone with my money but myself, and sure as hell wouldn't pay someone 1-2% a year PLUS the fees for transactions/mutual funds/etc to tell me where to put it. Those fees could add up to $1M+ over the course of 40-50 years easily.

An RIA can charge whatever amount for whatever service they want. An average hedge fund charges 2% flat fee plus 20% of the gains. Successful ones charge much more. The partners (investors) don't give a **** what you charge or how many trades you make. They just want to see the number at the end of the year. It's all about "Show me the money".

 

[dgoldenz]

An RIA can charge whatever amount for whatever service they want. An average hedge fund charges 2% flat fee plus 20% of the gains. Successful ones charge much more. The partners (investors) don't give a **** what you charge or how many trades you make. They just want to see the number at the end of the year. It's all about "Show me the money".

Which is exactly why I'd never pay someone such ridiculous fees no matter how rich I was...I believe something like 70% of all hedge funds don't beat the market average, so why would I want to pay someone 2%+ per year to not beat the average? Over the course of 40+ years, the number of fund managers that can beat the market more than 75% of the time are probably between slim and none.

The loss of gains with 2% fees over a long period of time is staggering, especially with a large portfolio.

 

[Franz Kafka]

The loss of gains with 2% fees over a long period of time is staggering, especially with a large portfolio.

I understand what you're saying but you're still thinking in terms of "market averages" which doesn't apply to hedge funds. Medallion returned 30% last year and that was net of 5% flat fee plus 44% performance fee. The same fund did 80% during 2008 crash (Mutual funds can't short). Again the point I'm trying to make is that the market is a casino and should only be allowed to those who can afford to lose.