[Boomer]

Thank you to all for answering my questions. Here’s the backstory: A friend showed me a list of the top holdings in her account managed by an advisor. (Not amounts, only fund names — I never discuss amounts.).

Anyway, I could see the type of funds they were — which had been chosen according to her risk tolerance. But I was trying to dissect each one to see the fees associated, but most were not easy to find out much about. I guess because they are probably institutional funds used by the really big money management houses and are possibly proprietary — or whatever it’s called when the fund can be bought only through an advisor.

I found one with a big front load and two with expenses of 1.18% which seemed way too high to me. I tried to use the FINRA evaluator but it did not give a lot of info. I did not get through the whole list.

I am not concerned that she is in the hands of a Bernie Madoff. That’s not it. It’s a big, legit, old advisory firm with a very high profile, and stockholders — which we all know come before the client. If she wants to do business with them, that is not my business, but …….it is just that I have an aversion to the wheels within wheels that can exist when you turn your money over to some advisors.

She does not ask questions. She just wants somebody to handle investments for her and that’s OK, but I wish she would ask more questions, other than what’s the return?

The fee paid for AUM I guess comes out quarterly. Not only do they make money when you do, they make money whether you do or not. They aren’t taking that fee out of only your return. It comes out of your total assets. I always suspect that some advisors get you in the door and then put you on auto-pilot and start collecting.

Of course, I know advisors are not doing charity work. They should get paid. But is the difference in fee-only and fee-based that with fee-based, an advisor can have it both ways — the fee from you and the back door stuff from funds they put you in? I know about the prospectus, but they are not the most inviting thing to wade through, so I bet most people don’t……

I think advisors should directly report what their TOTAL return is on having you as a client. As far as that fiduciary thing goes, it seems like it comes with a lot of subjectivity because funds can easily be chosen by an advisor according to your risk tolerance……..

But does being a fiduciary mean that the advisor does not have to consider the associated costs of the fund? (A low risk fund with a bigger fee is still a low risk fund. Right? So it looks to me like there you have it — fiduciary responsibility — subjectively.)

Oh, well………

Meanwhile, I will continue to manage the Boomer Fund. Maybe I would have done a lot better with an advisor. But I am wired to want to do it myself, mistakes and all. I understand everything I buy, but that does not mean I have never lost money. Been at it for over 30 years, but I keep things very simple and clear and that is what I would want from an advisor — if ever.

Like what manaboutown said, I can’t help but think about what if I need to turn it all over to an advisor. There comes a point in life where we do start thinking about the “What Ifs?”………

Boomer

PS: manaboutown shared a link to Investopedia. For those of you who have questions about investing topics or need to look up vocabulary used in the business, I highly recommend Investopedia. It is my go-to. Thanks.

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