Quote:
Originally Posted by Cornstock
So maybe a new topic that hasn't been expanded on lately, for those of us who work with financial advisors:
We're entering a new market that we haven't been through for a while. Perhaps, gone are the days of blindly picking an ETF linked to the S&P500 and being able to return 20%.
In an era of potentially elusive returns, what advantage do you see in having an FA choose an allocation appropriate for you within a fund family and paying the sales charge for an A share, vs choosing an actively managed fund with a higher yearly wrap fee that can theoretically keep your portfolio constantly balanced, and (depending on how aggressive your strategy) position the portfolio to take advantage of opportunities based on that particular firm's research?
From a pure numbers perspective, an A share's upfront commission would buy you approximately 3 years worth of management in an actively managed portfolio. Since the actively managed portfolio assesses the fees as you go, more of your money is invested earlier on, so you're better able to capture gains early on.
After the first 3 years, is the fee worth it? If we look at the last couple years I wouldn't think so, but in a more challenging market that expertise may be able to seek out higher returns.
Thoughts?
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I set my daughter up an account with Edward Jones and discussed with them where to invest. They charge 2% in and 2% out. Then I set up a custodial account on Etrade for her and put the rest of her money in the same funds he used. This way i have a professional I can use for advice without them stealing my /her money.
And i realize that although the more money they make you the more they make for themselves but they aren't as attached. I just don't believe in buying stocks or mutual funds and not keeping an eye on performance. what good is a stock that you bought at $20 and over 10 years goes up to $70 but at the end of the 10 years it's sitting at $20 again .