[quote=Mike Damone]

How
about this.  If the buyer of the financial product wants service
or planning via a 1-800 number or the internet, no annual fee / trail
paid to the rep who originally sold the product or service.

However, if they want a dedicated person they have to pay a fee / trail to the rep.

[quote=Knows Wall St.] [quote=Mike Damone]

How about this.  If the buyer of the financial product wants service or planning via a 1-800 number or the internet, no annual fee / trail paid to the rep who originally sold the product or service.

However, if they want a dedicated person they have to pay a fee / trail to the rep.

[/quote]

If Mr. Jones is invested in a family of funds, with attention paid to overlapping, why does he need you at all?

I understand that the fund family needs you to find Mr. Jones--and the fund family should pay you for finding him.

But once that payment has been made you become nothing more than a third party who is stealing from both the fund and the customer.

It amazes me that nobody has tried to expose the scam yet.
[/quote]

I'm not talking about paying attention to solely overlap.  I'm talking about being paid annual for making proactive changes to the portfolio, financial planning, having a relationship with the client and his family members.

Let's say I had a client with $100,000 and they were being charged an additional 1 percent annually.

I meet with then quarterly for a total of eight hours during the calendar year.

The questions is are we worth $125/hr for our overall services?

If the market is efficient I would imagine the answer lies in there somewhere.

scrim

[quote=scrim67]

Let’s say I had a client with $100,000 and they were being charged an additional 1 percent annually.

I meet with then quarterly for a total of eight hours during the calendar year.

The questions is are we worth $125/hr for our overall services?

If the market is efficient I would imagine the answer lies in there somewhere.

scrim

There is no reason why the sales force should be paid as if they were actually managing the money.

I agree that there is no reason to take an annual fee from a client who has a portfolio of nothing but loaded mutual funds all in the same family or from a portfolio of long term US Treasuries.  There is nothing to manage there.   Firms and advisors that abuse the fee for service platform by charging a fee and providing nothing should be disciplined.

There are those who are actually managing the clients portfolios. 

How would you suggest that we get paid for perfroming all of these services?. 

Should I get a one time fee only for investing the assets and no ongoing fees to compensate me for the time spent and research done on the accounts and for all the other services?  If so what is my incentive to give good customer service.  Why wouldn't I just move on to the next prospect.

Should I get paid every time I move assets?  If that is the case then don't you think it's an open invitation to churn the client's accounts when I am having a slow month?

Should I charge by the hour? How much?  $100 ?  $50?  $125?  If so, then the people with smaller accounts will be proportionally over charged and the people with larger more complex accounts will be under charged.

You seem to think that we are reaching into people's pockets without any warning.  A client who chooses to use a fee based advisor is fully aware of the charges and as I pointed out in my response to your realtor analogy: if the client doesn't think they are getting their money's worth, they can cancel the contract and do their own investing.   No one is forcing the client to stay with an advisor that is giving them poor service.  

There are many prospects and clients who are do it yourself types.  There is no problem with that and I acknowledge that they will not be my clients.  I don't want them in anycase.  I have many clients who have me managing the larger portion of their portfolios and still maintain an on line trading account because they want to frequently trade or otherwise play with those funds.  Fine... their perogative.  I refuse to give them any stock tips or advice in that area if that is what they chose to do.  That way if/when they lose their money it's not in my area of responsibility.

I don't have any seven figure accounts.

YET!

scrim

[quote=Knows Wall St.]
If Mr. Jones is invested in a family of funds, with attention paid to overlapping, why does he need you at all? [/quote]<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

If Mr. Jones thinks that investing in mutual funds much less all in a single family, and has the time and inclination to learn about asset allocation and can execute it on his own, he doesn’t need us. I would suggest that it’s a tiny, tiny fraction of the populace that fits that mold.

[quote=Knows Wall St.]
I understand that the fund family needs you to find Mr. Jones--and the fund family should pay you for finding him. [/quote]

You do understand that in a flat fee account the fund family doesn’t pay us, period, right?

[quote=Knows Wall St.]
But once that payment has been made you become nothing more than a third party who is stealing from both the fund and the customer. [/quote]

You’re yet to explain just how it is that a client is better off paying a massive front load and (in order to minimize that front load) using a single fund family AND paying a 12b-1 that he would avoid in a flat fee account. Moreover, you’ve yet to explain why HNW clients are using funds to begin with…

[quote=Knows Wall St.]
It amazes me that nobody has tried to expose the scam yet.
[/quote]

Well, it doesn’t amaze me at all that you have some very basic elements of today’s business twisted and distorted…

[quote=Knows Wall St.] [quote=scrim67]

Let's say I had a client with $100,000 and they were being charged an additional 1 percent annually.

I meet with then quarterly for a total of eight hours during the calendar year.

The questions is are we worth $125/hr for our overall services?

If the market is efficient I would imagine the answer lies in there somewhere.

scrim

[/quote]

What is your hourly rate if the account is worth $1 million?
[/quote]

It's funny that you would come at the question from that direction. My first question would be why is someone with that sort of money using mutual funds to begin with...

[quote=babbling looney]

There is no reason why the sales force should be paid as if they were actually managing the money.

I agree that there is no reason to take an annual fee from a client who has a portfolio of nothing but loaded mutual funds all in the same family or from a portfolio of long term US Treasuries.  There is nothing to manage there.   Firms and advisors that abuse the fee for service platform by charging a fee and providing nothing should be disciplined.

There are those who are actually managing the clients portfolios. 

How would you suggest that we get paid for perfroming all of these services?. 

Should I get a one time fee only for investing the assets and no ongoing fees to compensate me for the time spent and research done on the accounts and for all the other services?  If so what is my incentive to give good customer service.  Why wouldn't I just move on to the next prospect.

Should I get paid every time I move assets?  If that is the case then don't you think it's an open invitation to churn the client's accounts when I am having a slow month?

Should I charge by the hour? How much?  $100 ?  $50?  $125?  If so, then the people with smaller accounts will be proportionally over charged and the people with larger more complex accounts will be under charged.

You seem to think that we are reaching into people's pockets without any warning.  A client who chooses to use a fee based advisor is fully aware of the charges and as I pointed out in my response to your realtor analogy: if the client doesn't think they are getting their money's worth, they can cancel the contract and do their own investing.   No one is forcing the client to stay with an advisor that is giving them poor service.  

There are many prospects and clients who are do it yourself types.  There is no problem with that and I acknowledge that they will not be my clients.  I don't want them in anycase.  I have many clients who have me managing the larger portion of their portfolios and still maintain an on line trading account because they want to frequently trade or otherwise play with those funds.  Fine... their perogative.  I refuse to give them any stock tips or advice in that area if that is what they chose to do.  That way if/when they lose their money it's not in my area of responsibility.

[/quote]

Save your breath, Babs.  Putsy, for all his bluster, obviously has no understanding of the services that you mention, or the value to the client for their timely performance.

[quote=Philo Kvetch]Save your breath, Babs.  Putsy, for all his bluster, obviously has no understanding of the services that you mention, or the value to the client for their timely performance.[/quote]

I was just about to say the same thing...

[quote=mikebutler222][quote=Knows Wall St.] [quote=scrim67]

Let's say I had a client with $100,000 and they were being charged an additional 1 percent annually.

I meet with then quarterly for a total of eight hours during the calendar year.

The questions is are we worth $125/hr for our overall services?

If the market is efficient I would imagine the answer lies in there somewhere.

scrim

[/quote]

What is your hourly rate if the account is worth $1 million?
[/quote]

It's funny that you would come at the question from that direction. My first question would be why is someone with that sort of money using mutual funds to begin with...

[/quote]

I'm sure I will get flamed for the question, but if you would not use funds what would you use and why?  I assume you mean individual stocks in a seperately managed account, at least if it is in a taxable account, but if it is in an IRA, why not mutual funds?

I'm posing a genuine question here, I was trained that EVERYONE could use American Funds, and I'm slowly exploring other options.

[/quote]

I'm sure I will get flamed for the question, but if you would not use funds what would you use and why? 

I'm posing a genuine question here, I was trained that EVERYONE could use American Funds, and I'm slowly exploring other options.

[/quote]

What would you use? How many investment options are there to offer your clients?

How deep is the ocean? How high is the sky?

Keep exploring those options, American funds, as good as they are, isn't the answer for everybody. Start by finding a few other fund families to show to clients.

[quote=EDJ4now][quote=mikebutler222][quote=Knows Wall St.] [quote=scrim67]

Let's say I had a client with $100,000 and they were being charged an additional 1 percent annually.

I meet with then quarterly for a total of eight hours during the calendar year.

The questions is are we worth $125/hr for our overall services?

If the market is efficient I would imagine the answer lies in there somewhere.

scrim

[/quote]

What is your hourly rate if the account is worth $1 million?
[/quote]

It's funny that you would come at the question from that direction. My first question would be why is someone with that sort of money using mutual funds to begin with...

[/quote]

I'm sure I will get flamed for the question, but if you would not use funds what would you use and why?  I assume you mean individual stocks in a seperately managed account, at least if it is in a taxable account, but if it is in an IRA, why not mutual funds?

I'm posing a genuine question here, I was trained that EVERYONE could use American Funds, and I'm slowly exploring other options.

[/quote]

I won't flame you, and in fact I may get flamed for saying this, but since you asked. There are a variety of reasons I usual;y avoid mutual funds. In no particular order;

1) You get no break on management fees, regardless of how much money you bring to the fund.

2) You're at the mercy of the herd when it comes to inflows and outflows of funds. Real damage is done to returns because of it.

3) The stated management fees don't include every cost. Bogle makes a good case that trading costs add a significant margin to the stated numbers.

4) Style drift.

5) Too much latitude left to managers.

6) Too many better options including SMAs and ETFs.

mike, I hope you won’t get flamed.  I think you’re pretty dead on with those points, esp #3.  I don’t think many people know that trading costs are not included in the fund’s total operating expenses. I’ve seen .25-.50% as estimates.  Higher turnover funds, though, might be even higher.

Go to personalfund.com to find the true cost of MF ownership… It includes both stated expense ratios and the transaction/operating expenses, giving you an annual total expense of owning any particular fund. Put in the ticker on an aggressive growth or international manager and the results could easily be upwards of 4% per year… I think I remember Fidelity Advisor Diversified International being upwards of 6%, but dont quote me on that…

Suppose you have a client with $1 million invested.

Suppose the net return for the year is 8% or $80,000.

If your fee is 1%, your fee will be $10,000.

$10,000 is 12.5% of the client's income for the year.

How long do you suppose you can keep fooling them?

[quote=Knows Wall St.]

Suppose you have a client with $1 million invested.[/quote]

Sorry, no sale, Putsy. You've ignored far too many responses to have the right to ask me (and speaking just for myself) any more questions. Should you get around to answering the things before you, perhaps you can ask a few more.

[quote=Knows Wall St.]

Suppose you have a client with $1 million invested.

Suppose the net return for the year is 8% or $80,000.

If your fee is 1%, your fee will be $10,000.

$10,000 is 12.5% of the client’s income for the year.

How long do you suppose you can keep fooling them?

[quote=mikebutler222][quote=Knows Wall St.]

Suppose you have a client with $1 million invested.[/quote]

Sorry, no sale, Putsy. You've ignored far too many responses to have the right to ask me (and speaking just for myself) any more questions. Should you get around to answering the things before you, perhaps you can ask a few more.

[quote=mikebutler222][quote=Knows Wall St.]

Suppose you have a client with $1 million invested.[/quote]

Sorry, no sale, Putsy. You've ignored far too many responses to have the right to ask me (and speaking just for myself) any more questions. Should you get around to answering the things before you, perhaps you can ask a few more.

[/quote]

I thoght you kids were complaining that I talk too much.

Trust me I have no problem answering questions, but you have to ask them, not imagine that you did.