[NemesisX]

Originally Posted by blankstar43

2.5% seems very excessive. I work at a registered investment advisor and am responsible for a lot of research and due diligence on our investments. We have a tiered fee only schedule that starts at 1%/year and works it's way down based on asset level. We get absolutely no commission or transaction based fees and receive no kickbacks from specific funds if we use them which allows us to only invest in what we believe will give our clients the best after fee, after tax results for their given circumstance.

A lot of the broker/dealer shops will charge commission based pricing or higher fee based pricing and also have incentives (such as getting paid extra to use specific funds that often pay to be on their platform) to use certain investment vehicles.

Doing your homework before picking a money manager can make a very significant difference in long term results.

That's exactly what I thought. Most layman articles I've read seem to suggest that a typical front-end commission range is between .5% and 1.25% of total assets. This woman is effectively charging double the higher end of that range.

Her commission fees are based on the value of the individual trade - not total assets. That's why it's in her best interest to buy and sell in chunks of up to $5000 regardless of total assets, which is precisely what she did under the guise of "sufficiently diversifying" the portfolio.

On the other hand my dad's not a fan of paying 1% of assets under management per year either. He has a TD Ameritrade account and in addition giving him $2500 in visa gift cards (which was unexpectedly mailed to him as a "courtesy") they asked to actively manage his TD Ameritrade assets @ 1% per year which he politely declined. Basically, my dad is convinced that the stock market is in for a massive correction within the next year or three and he's just biding his time right now. 30% of his total portfolio is with Fidelity and is in low expense ratio (~.3%-.75%), no load ETFs which have done great. 50% is in his TD Ameritrade account, half of which is in cash earning nothing (several FDIC-insured TD Ameritrade checking accounts up to the FDIC insurance limit, essentially) and the other half in mutual funds. Another 10% is in a money market account from his local credit union earning basically nothing (like .9% per year). And, 8% is with this woman at Edward Jones. And then the balance in regular checking for daily expenses. I should mention: having an abundance of his portfolio in cash is just a recent phenomenon that's motivated by his belief that the stock market is in for an imminent correction. Obviously keeping excessive cash on hand is absolutely idiotic as a long term investment strategy.

But yeah, his idea is to wait for a serious market correction/crash within the next couple of years and buy his tried and true ETFs for cheap, and then he basically wants to see what this woman at Edward Jones does with his money and he'll maybe mirror her investment strategy depending on how successful she is.

Again, my dad's colleague gave her a glowing recommendation, claiming that she "doubled" his money within X years and totally beat the general market during that same time frame. That's the only reason he's putting up with these 2.5% commissions. I guess we'll see what happens. You bring up an interesting point about financial advisers sometimes receiving additional incentives to use certain investment vehicles. I think Edward Jones actually got into trouble a couple of years ago for not being sufficiently transparent on that very issue.