[quote=pjgallo]I didn’t really mean to post here again, but I’d like to clear something up if I may

I became a little suspicious of Edward Jones when I heard that certain companies were giving bigger commissions to reps that promoted their funds.  I checked my portfolio and all the funds I held in my Roth (seven of them) were on the "preferred" list.   It led me to question whether my "friend" actually had my best interest at heart. I'm not a youngster and my Roth holds about $50,000 - small potatoes to many, but it's mine and I'm anxious about protecting it. Thanks for allowing me to intrude - I'll read the replies, but probably not post again. Thank you very much for your time. JPG[/quote]   You are not interpreting the info you heard correctly.   I'll explain, then you need to go talk with your friend about the investments you own.  You need to ask him specifically how he gets paid or got paid to give you advice.    Broker sold mutual funds have two costs associated with them.  They are commissions and service fees.  With an A share, which I will assume you purchased and will therefore use for discussion purposes, you pay an up front commission.  Commissions are spelled out in the prospectus, a legal document akin to a contract that you would have received when you bought the fund, and are set by the mutual fund company.  They don't change from firm to firm.  So, your EDJ friend will charge you the same thing on an A share as you would pay at any other brokerage firm out there.  We don't get extra commission for selling you funds on our preferred list.  Commissions on A shares typically start at 5.75% and go down with the more money you put into a company.      Service fees are also set by the fund company.  They too are a prospectus item and not negotiable from firm to firm.  Average service fee is somewhere in the neighborhood of 1.25% per year.  Those charges are taken out of your holdings throughout the year and any returns you see reported are net of those fees.    Now, what you undoubtedly read about was revenue sharing.  I don't know where it started, but the basic concept is companies like EDJ (and just about every other brokerage firm out there) receive payments from mutual fund companies in exchange for offering their funds more predominantly than others.  At EDJ we have 7 preferred fund families, which include American Funds and Lord Abbett.  We also have preferred annuity vendors.  We hear from those vendors more often than any other vendor in the business.    What those revenue sharing payments mean to your account is pretty minimal.  American Funds pays $2 per every $10,000 invested with EDJ and Lord Abbett is $10 per every $10,000.  So if your $50,000 is split evenly between the two, the revenue sharing EDJ gets from your assets amounts to $30 a year.  If your advisor had really been looking out for himself instead of you he would have put you with one of the other vendors who pay EDJ more in revenue sharing.    You can be suspicious of your advisor if you like.  But if you thought that your advisor was getting paid a ton more in commissions for buying you American Funds and Lord Abbett funds, you need to change your thinking.  Then you need to take his advice and move some of that money you have in your money market account into your Roth IRA.  Then you need to apologize to him for thinking bad thoughts about him.  Then you need to send 3 of your friends to go see him.  People like you and your friends need guys like him at times like these.  You'll thank him later.   

PJ, the way this industry charges clients is the product of a changing and confusing regluatory environment.

Don't blame  the advisor. As long as you understand how your advisor gets paid, and the fact that everyone needs to get paid, you can make an intelligent choice.

In the near future, I think fees and such will become much easier for the average person to understand.