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Pay-to-Play, How to Stifle the Competition

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Jun 29, 2012 5:48 pm

moneyinmotion

Joined: 2011-11-04Offline

Just came across this:

https://www.edwardjones.com/en_US/disclosures/revenue_sharing/index.html

...and I was wondering, how many advisors and their clients have any idea how much of these revenue sharing agreements are significantly influencing their mutual fund, annuity, etc allocation process.

For EDJ, 20% of their net income comes from "kickbacks"

Does anyone else know firms who have similar (significant) agreements? 

Jul 19, 2012 8:09 pm

Amber_M

Joined: 2011-12-26Offline

Pay to play? Our former Gov Blago is in jail over that.

Jul 30, 2012 4:46 pm

TheMachine

Joined: 2011-06-30Offline

Like a grocery store charges for shelf space.

Aug 2, 2012 11:30 am

NOVA

Joined: 2005-01-11Offline

I know WFA takes 40 bps and I think all the wirehouses get essentially that. I don’t think most advisors realize this - imagine, PIMCO total return fund A-share…90 bps expense ratio. Of that 25 is the 12b1 and 40 is revenue sharing. If you thought you were getting a 50% payout you were wrong. If your client thought they were paying for 90 bps for investment management they too were wrong. This practice strikes me as unethical…(oh…and try finding this in a prospectus…it’s not there!)