Why Brokers Sell Mutual Funds

413 views
345 views

Published on

Ever get curious as to why brokers seem to push mutual funds more often than Investment Advisers? It is in your best interests as an investor to know why.

Published in: Economy & Finance, Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
413
On SlideShare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
0
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Why Brokers Sell Mutual Funds

  1. 1. Mullooly Asset Management PodcastMay 8, 2013Mullooly Asset Management May 2013
  2. 2. Why Brokers Sell Mutual Funds(and Advisers Buy ETF’s Instead)Finance committee member for my local parishHave a large brokerage firm handling investmentsMullooly Asset Management May 2013
  3. 3. Why Brokers Sell Mutual Funds(and Advisers Buy ETF’s Instead)Account is full of C-shares (low level load funds)- do not have an upfront charge- typically a 1% annual 12b-1 feeIf the fund “earned” a net return of 9%, it actuallyearned 10%Mullooly Asset Management May 2013
  4. 4. Why Brokers Sell Mutual Funds(and Advisers Buy ETF’s Instead)Asked why they did not consider Exchange TradedFunds- “They would have to pay a commission”- “Even after a discount the commission would beabout 1%”Mullooly Asset Management May 2013
  5. 5. Why Brokers Sell Mutual Funds(and Advisers Buy ETF’s Instead)With PTTCX annual expenses are 1.60%With C-shares may not pay out of pocket to own but:- Pay a 1% fee every single year you hold fundEx.) You have $200,000 in one fund, you pay$2,000 every year in built in feesMullooly Asset Management May 2013
  6. 6. Why Brokers Sell Mutual Funds(and Advisers Buy ETF’s Instead)With an ETF you pay a commission to buy and sellbut:- costs are typically lower than owning a fundIf your investment adviser places trades through adiscount broker (they should) you’ll find that the“big scary commission” to be $10-$12 (possibly free!)Mullooly Asset Management May 2013
  7. 7. SummaryA fee-only investment adviser will work to keep trading costslowBroker has to get paid, even their fee programs are "fees-in-lieu-of commissions”Brokers don’t win trips and get awards for making themost money for their clientsThey get recognition for generating most revenue for theirfirmThis *could* skew the products the broker offers/shows theirclients. Mullooly Asset Management May 2013
  8. 8. None of the securities mentioned in this (or any)podcast or video represent past specificrecommendations of Mullooly Asset Management.This video is NOT a recommendation to buy or sell anyof the securities mentioned here.If you’re relying on a podcast for investment advice, youare likely making a huge mistake.We strongly urge our listeners to consult with theirinvestment advisor before they make a decision to buyor sell any investment.Mullooly Asset Management May 2013
  9. 9. Mullooly Asset Management, LLCsupport (at) mullooly (dot) net732-223-9000www.mullooly.netMullooly Asset Management May 2013
  10. 10. Mullooly Asset Management, LLCsupport (at) mullooly (dot) net732-223-9000www.mullooly.netMullooly Asset Management May 2013

×