Quote:
Originally Posted by retiredguy123
Personally, I don't think an advisor should be required to report their income to a client. Other people who sell products and services don't disclose their income. The mutual fund prospectus discloses a lot of infomation about the cost of the fund, but most people don't read it. But, even if they did, what difference does it make how much of the cost goes to the advisor? The client still has to pay it.
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I know people don’t read the prospectus, but what I was talking about is that a good advisor should know that and want to educate his clients and not just say I told you so in the prospectus.
By that I mean a good advisor should not imply that their only fee is the agreed upon percentage, usually 1% of AUM, if it is not just that. I think that if they are collecting other fees and/or loads, they should point that out in the prospectus, maybe take a highlighter to it.
Let the clients do their own math, but let them know where the extra math is if they want to do it.
Like you said, the client is paying, but I bet a lot of them think they are paying just that 1%. I am still recovering from seeing that 4.5% front load on one of my friend’s funds. And that was a serious chunk of change. The only need for a load in this world of so many choices of funds is for a commission. She thinks she is paying just that 1% of AUM.
But I will not give you too hard a time for your opinion. That is because I am a retired high school teacher and we old teachers can’t help thinking everybody should have the opportunity to understand things by getting all the information they need — whether they want to — or not, by golly!
….‘tis an affliction, I know, and I cannot seem to get past it and I want all those financial advisors to educate their clients by being totally transparent about where alllll the fees could be. Informed decisions needed. I do not expect them to work for free, but all cards on the table seems fair.
Boomer