Cheated of your trails?

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Jan 18, 2008 2:40 pm

Hi, I am a staff writer for RR mag and want to get the forum's take on this. An anonymous wirehouse advisor called me and said one of the fears most advisors have is whether they are getting the right trails from mutual fund companies. This rep, who said he's been in the business for 18 years, says he lost $1,000 in third quarter trails...If you're a wirehouse advisor, ever heard anything about this? If so, please share. Thanks.

Jan 18, 2008 3:04 pm

Although they are itemized for us, I am not going to track them.  I actually do have that fear, but not sure there is much I am going to do about it.  Once in a blue moon I will conduct a sample audit to see if any are missing.  But I have yet to see any missing.  FYI I work at Jones.

Jan 18, 2008 6:18 pm

Good luck with your search, I was very concerned that this was happening at Edward Jones.  I have since left and gone independent.  I roughly tracked my trails for a year and did not think they were very accurate.  Same problem though, just too difficult to figure out.  (Esp since I was leaving shortly anyway.) 

Jan 18, 2008 8:05 pm
gad12:

Good luck with your search, I was very concerned that this was happening at Edward Jones. I have since left and gone independent. I roughly tracked my trails for a year and did not think they were very accurate. Same problem though, just too difficult to figure out. (Esp since I was leaving shortly anyway.)





Since it's all electronic, it would be the same anywhere (indy or captive firm). Despite waht everyone likes to claim about Jones, I find it hard to believe they would intentionally withhold trails from anyone. Like I said, I have never actually found that I was missing any, I just wonder occassionally how I would know if I DID. I actually do unscientific calcs based on my mutual fund aum once in a while to make sure I am in the ballpark.

Jan 18, 2008 9:12 pm
Broker24:
gad12:

Good luck with your search, I was very concerned that this was happening at Edward Jones.  I have since left and gone independent.  I roughly tracked my trails for a year and did not think they were very accurate.  Same problem though, just too difficult to figure out.  (Esp since I was leaving shortly anyway.) 



Since it's all electronic, it would be the same anywhere (indy or captive firm). Despite waht everyone likes to claim about Jones, I find it hard to believe they would intentionally withhold trails from anyone. Like I said, I have never actually found that I was missing any, I just wonder occassionally how I would know if I DID. I actually do unscientific calcs based on my mutual fund aum once in a while to make sure I am in the ballpark.

 
However my friend I now get an itemized printout from the each mutual fund company that tells my exact assets and trails with the fund family.  I am now much more at ease and confident I am getting my trails.  I wonder why jones never sent me those printouts.
Jan 19, 2008 8:37 am

BofA witholds a % (10% - 20% depending on your grid) of trails and pays it in stock the following February as long as you fulfill the many metrics.  I was pissed when it was first announced but I have to admit, you don't miss the cash in the short term and I have over $30k in stock coming my way next month.

 
Starting in 2008, trailers under $5.00 don't get paid out.  The mother ship eats it.  Doesn't sound like much  - but 2000 reps x 12 months - I'd love to see what that "rounding error adds up to..."
Jan 19, 2008 11:16 am

I was really concerned when I went Indy from Jones a few years ago about the fact the some of the trails would get lost.  After things settled down, I looked at the detailed reports from fund companies and spot checked my major ones and they looked fine.  However, there is NO WAY I could ever do a complete line-by-line audit.  I have found out on several occasions that Putnam mixed up my rep code with someone elses at my b/d on a few 529 accounts.  Our numbers are almost identicle except mine has an "S" where his shows a "5".  It wasn't enough $$ to justify asking for it back.  I hope I not getting screwed on anything else...

Jan 19, 2008 12:01 pm

It's not a concern.  With the volume of trails that people get, it's too hard to keep track of exactly, but one should have a rough estimate.  It would not surprise me if they are often wrong, but I'd think that I'd get too much as often as too little.

Jan 19, 2008 9:51 pm

I usually scan my detail report from the company, and have yet to find anything too out of place.


I did, just yesterday, figure out that Putnam trails don't start until the 13th month!  I knew American Funds did this, but I always figured that they did it because they could (incredible performance, low fees, LONG track records, etc.). Where does Putnam get off doing this?!  I already didn't sell much Putnam, but I am TOTALLY done now.  Their funds are just not that good. I was pretty much only selling their Growth Strategy, and using the M share (65 bps trails). But realizing I have to wait 13 months for that trail sucks.
Jan 21, 2008 11:01 am

At Jones we have a detail screen that will tell us, down to the individual account, what trails are being paid.  Three different "levels" of info.  First is by fund family.  They breakdown firm name vs customer name and even tell you what assets aren't eligible for payout yet (like the American Funds that are only 6 months old.)  The next screen will break the fund families down by fund.  So, for instance, I can tell I get paid $27.06 per month on American Balanced Fund A.  Then one more level down you can look at it by account.  So, if I were that concerned about it, I could have my BOA check them.  I know about what I average, so I know about what it's going to be each month.  As long as I'm not missing a thousand, I don't really pay that much attention.   

Jan 21, 2008 11:10 am
Spaceman Spiff:

So, for instance, I can tell I get paid $27.06 per month on American Balanced Fund A.... I know about what I average, so I know about what it's going to be each month. 

 
Since funds pay trails quarterly (except I think Franklin still is semi-annually), does your firm hold the quarterly payment & pay it out monthly?  I just found this interesting and had never heard of anyone doing that.  If that were the case, the firm would have the use of your money for a couple of months.
Jan 21, 2008 11:31 am
OldLady:
Spaceman Spiff:

So, for instance, I can tell I get paid $27.06 per month on American Balanced Fund A.... I know about what I average, so I know about what it's going to be each month. 

 
Since funds pay trails quarterly (except I think Franklin still is semi-annually), does your firm hold the quarterly payment & pay it out monthly?  I just found this interesting and had never heard of anyone doing that.  If that were the case, the firm would have the use of your money for a couple of months.
 
My impression when I was at EDJ was that they had gotten the "preferred" funds to pay monthly instead of quarterly.  Non-preferred and most or maybe all annuities still payed quarterly. 
 
I know that EDJ doesn't get much respect here, but they are big enough if they threatened to pull a company off of the preferred list unless they payed monthly, I would assume most mutual fund companies would adjust and pay them monthly.  It can't be more expensive than revenue sharing, and we all know the story about how that turned out.
Jan 21, 2008 5:27 pm

The one problem I did encounter when I left Jones to go to LPL is that Jones did a TA replacement for me for a month and then brought in another FA to replace him--each time a new FA was placed in the branch Jones did a (Blast)(This is when they notify each mutual fund company and annuity company of the new FA) so even after I had did a change of broker/dealer on a mutual fund, Jones would notifiy the fund company of  the new FA and they would place Jones back on the mutual fund account...then I would have to submit new paperwork to change the broker dealer again.  So I lost several thousand dollars of trails to the new FA.  I did get it straight!

Jan 21, 2008 5:44 pm
NOFX:

BofA witholds a % (10% - 20% depending on your grid) of trails and pays it in stock the following February as long as you fulfill the many metrics. I was pissed when it was first announced but I have to admit, you don't miss the cash in the short term and I have over $30k in stock coming my way next month.



Starting in 2008, trailers under $5.00 don't get paid out. The mother ship eats it. Doesn't sound like much - but 2000 reps x 12 months - I'd love to see what that "rounding error adds up to..."





Trails under $5?? Like you, I LOVE those $2000 acct's. As a bank rep I have 78 of those acct's in my book with a total security value of $59,000. If I was working for B of A, that's $148 of revenue the mother ship is eating up. Now considering that I don't spend a great deal of time w/ those acct's, I'm happy to give up the $148 in trails to avoid a several thousand dollar lawsuit. I could also sell a single $5000 investment instead... Let me think about that a second... Sorry, too much thought for too little gain. I'm going to make another phone call, instead.

Jan 22, 2008 7:07 pm
Ashland:
NOFX:

BofA witholds a % (10% - 20% depending on your grid) of trails and pays it in stock the following February as long as you fulfill the many metrics.  I was pissed when it was first announced but I have to admit, you don't miss the cash in the short term and I have over $30k in stock coming my way next month.

 

Starting in 2008, trailers under $5.00 don't get paid out.  The mother ship eats it.  Doesn't sound like much  - but 2000 reps x 12 months - I'd love to see what that "rounding error adds up to..."



Trails under $5?? Like you, I LOVE those $2000 acct's. As a bank rep I have 78 of those acct's in my book with a total security value of $59,000. If I was working for B of A, that's $148 of revenue the mother ship is eating up. Now considering that I don't spend a great deal of time w/ those acct's, I'm happy to give up the $148 in trails to avoid a several thousand dollar lawsuit. I could also sell a single $5000 investment instead... Let me think about that a second... Sorry, too much thought for too little gain. I'm going to make another phone call, instead.

 
The point was NOT that any rep would miss the trail, but that the bank cared enough to eat it.   If it meant I could unload the account, I would gladly give up trails under a significantly higher number.  Imagine the time you could free up?
Jan 23, 2008 10:25 am

All of Jones' preferred funds pay monthly.  Kind of nice - no ups and downs.  However, I do use some other fund families as well, so I get some of the quarterly "good months".

Jan 23, 2008 11:00 am

Except for Oppenheimer.  They pay quarterly.  But, I don't know of that many people using Oppy, so it probably doesn't matter.