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Originally Posted by retiredguy123
When I took the CFP program many years ago, it was a 2-year program that included general principles of financial planning, investments, insurance, taxes, retirement, and estate planning. Being a financial advisor was a subset of CFP, but many graduates made a living by being an advisor. It is hard to make a living just selling financial plans.
I don't see anything wrong with selling products for a commission as long as the client knows how you are being compensated, and combining commissions with an AUM percentage is okay. But, again, the client should know how you are being compensated. Personally, I don't believe in closed ended funds because the fund is designed as a high commission product and marketed by a select group of advisors. I much prefer open ended funds where any advisor can sell them. But, I guess there are some honest advisors who, in some circumstances, could recommend a closed ended fund if they really believe it is a good investment even though they are receiving a high commission.
Personally, I have always invested in index funds because I think they will perform as well or better than actively managed funds. I have never purchased an individual stock, but, many years ago I bought shares in the Magellan fund that was managed by Peter Lynch. It made super returns for awhile, but when Peter Lynch retired, it became an average fund managed by some young whippersnapper. I remember when that happened because the fund reported to the IRS about $30K in taxable gains that I had to pay tax on when the fund sold off a lot of stocks. I still own the fund and many of my index funds. I have held them so long that it would be a capital gains tax disaster to sell them now.
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Thank you. So a CEF can slide by with that thing called suitability?
I just luv it when they say, “Oh no, the client is not paying those big expenses. The fund is. “Geez. Where is the fund getting the money to pay those huge expenses for a CEF. (Rhetorical question there; thus, no question mark.)
I don’t have any CEFs. But I want to (sort of) understand them. I think I am barking up the right tree — where those big expenses think they are hiding.
Boomer