C Shares

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Sep 28, 2006 9:35 am

I just dont get why anyone in their right mind would sell class A shares of mutual funds. It is ridiculous and wrong for the client. How many of you people switch A shares well before it makes sense for the client? You all justify it to yourself by saying that this changed and that changed...the fact remains that you do it just to get sales charges multiple times. How many of you will admit that you frequently go from 1 class A share into another family's class A share within a few years? I bet you that none of you will admit this but many of you do it. What a bunch of jokers. I feel like a fool even writing this during the work hour...what a waste of time. The funny think is that there are some of you who will write paragraph after paragraph about how great you are and how you do the right thing but you sit on a stupid message board all day. No wonder this is a forum for small producers with big mouths.

Sep 28, 2006 9:57 am

"The work hour"--you've got it down so you only work an hour?



That is so kewl.

Sep 28, 2006 10:24 am

[quote=Cshareseller]I just dont get why anyone in their right mind would sell class A shares of mutual funds. It is ridiculous and wrong for the client. How many of you people switch A shares well before it makes sense for the client? You all justify it to yourself by saying that this changed and that changed...the fact remains that you do it just to get sales charges multiple times. How many of you will admit that you frequently go from 1 class A share into another family's class A share within a few years? I bet you that none of you will admit this but many of you do it. What a bunch of jokers. I feel like a fool even writing this during the work hour...what a waste of time. The funny think is that there are some of you who will write paragraph after paragraph about how great you are and how you do the right thing but you sit on a stupid message board all day. No wonder this is a forum for small producers with big mouths. [/quote


OK, Cshare, now tell us how you really feel.


Try this; You don't believe in anything other than "A" shares. So you put all, as in every one of, your client's into "C" shares. Problem is, "C" shares are not appropiate for all of your clients. The trail commission was never, as in not ever, intended to be an asset management fee. "C" shares were developed to answer the specific need of short term holding periods. The mutual fund Grand Pooba's recognized that there are those who do not wish to own a fund for four or five years, or longer. It is for these individuals, and that purpose, that "C"shares were created. Then, of course, we the FAs found a way to bend that to our needs and make "C" shares a one size fits all SMA surrogate. As unfortunate as this is for the long term buy and hold clients, it's more unfortunate for the FAs being hauled before the NASD to explain why they though every client needed "C" shares. For them, it is not a happy ending.


And you're right, we are a bunch of small producers. We like it that way!


Sep 28, 2006 10:35 am
BondGuy:

[quote=Cshareseller]I just dont get why anyone in their right mind would sell class A shares of mutual funds. It is ridiculous and wrong for the client. How many of you people switch A shares well before it makes sense for the client? You all justify it to yourself by saying that this changed and that changed...the fact remains that you do it just to get sales charges multiple times. How many of you will admit that you frequently go from 1 class A share into another family's class A share within a few years? I bet you that none of you will admit this but many of you do it. What a bunch of jokers. I feel like a fool even writing this during the work hour...what a waste of time. The funny think is that there are some of you who will write paragraph after paragraph about how great you are and how you do the right thing but you sit on a stupid message board all day. No wonder this is a forum for small producers with big mouths. [/quote


OK, Cshare, now tell us how you really feel.


Try this; You don't believe in anything other than "A" shares. So you put all, as in every one of, your client's into "C" shares. Problem is, "C" shares are not appropiate for all of your clients. The trail commission was never, as in not ever, intended to be an asset management fee. "C" shares were developed to answer the specific need of short term holding periods. The mutual fund Grand Pooba's recognized that there are those who do not wish to own a fund for four or five years, or longer. It is for these individuals, and that purpose, that "C"shares were created. Then, of course, we the FAs found a way to bend that to our needs and make "C" shares a one size fits all SMA surrogate. As unfortunate as this is for the long term buy and hold clients, it's more unfortunate for the FAs being hauled before the NASD to explain why they though every client needed "C" shares. For them, it is not a happy ending.


And you're right, we are a bunch of small producers. We like it that way!




Make that; You don't believe in anything other than "C" shares.


Small producer with fumble fingers

Sep 28, 2006 11:08 am
Cshareseller:

I just dont get why anyone in their right mind would sell class A shares of mutual funds. It is ridiculous and wrong for the client. How many of you people switch A shares well before it makes sense for the client? You all justify it to yourself by saying that this changed and that changed...the fact remains that you do it just to get sales charges multiple times. How many of you will admit that you frequently go from 1 class A share into another family's class A share within a few years? I bet you that none of you will admit this but many of you do it. What a bunch of jokers. I feel like a fool even writing this during the work hour...what a waste of time. The funny think is that there are some of you who will write paragraph after paragraph about how great you are and how you do the right thing but you sit on a stupid message board all day. No wonder this is a forum for small producers with big mouths.


Then why are you here if you are so awesome?

Sep 28, 2006 6:19 pm

According to the rules C shares are appropriate when used in an asset allocation strategy, I do not know of a fund family that is good at everything. Do you?

Sep 29, 2006 11:29 am
bankrep1:

According to the rules C shares are appropriate when used in an asset allocation strategy, I do not know of a fund family that is good at everything. Do you?


Hoping for major rebalancing? That's the only way C shares wouldn't get the attention of the suits in compliance. At least, at my firm.


I like C shares too. When the new "C share Guidelines" were first issued by my firm I rolled my eyes. My thinking was, you guys make more money on either A shares or MF wrap accts, so how convenient! But, from my friends around the industry, I've learned that this is coming from the NASD.

Sep 29, 2006 3:00 pm

It's too bad the NASD (and others) have decided that the only factor that matters is the hypothetical lowest cost over 10 yrs.  Whatever happened to freedom of choice and buyer responsibility.


Some folks prefer the lowest long term costs (A shares), some prefer flexibility (C shares), and some even prefer a surrender charge that gives them incentive to stay committed long term (B shares).


When we take away these options, its the investor that loses.  Now I can't sell C shares, so instead I put them in an advisory account and charge them 1% (and I keep the .25% 12b-1 fee as well).  Somehow that's better than a .75% C share because the charge isn't "hidden" and I have the obligation to review their account annually (I actually do give better service to my advisory clients because thats what they pay for, but thats a different topic).   


If the client doesn't want to pay an upfront commision or an advisory fee, then they go buy no loads (many of which charge about the same as many C shares) and make all the mistakes do it yourselfers are prone to. 


Professional service costs money, let the clients decide how they want to pay for it.

Sep 29, 2006 4:51 pm

I'm a big advocate for C shares and utilize them frequently.  I think it gives the client excellent flexibility (1 year CDSC) and doesn't start them behind the proverbial 8 ball (down 5.75%).  Granted I try and use A-shares when it's over 500k and the time frame for investment is well over 5 years.  I only use B shares in either 529 plans or IRA's when the amount is under 25k and the time frame is 6 years or longer.


My firm was frowning upon the use of C shares for a period of time; I think they've backed off recently from strict enforcement.  I always inform the client of the annual fees and the 1 year CDSC for C shares.  And yes, the client not actually seeing the fee is beneficial to us advisors. 

Sep 29, 2006 6:52 pm
BondGuy:
bankrep1:

According to the rules C shares are appropriate when used in an asset allocation strategy, I do not know of a fund family that is good at everything. Do you?



Hoping for major rebalancing? That's the only way C shares wouldn't get the attention of the suits in compliance. At least, at my firm.



I like C shares too. When the new "C share Guidelines" were first issued by my firm I rolled my eyes. My thinking was, you guys make more money on either A shares or MF wrap accts, so how convenient! But, from my friends around the industry, I've learned that this is coming from the NASD.





What do you mean by major rebalancing?

Sep 29, 2006 8:38 pm
bankrep1:
BondGuy:
bankrep1:

According to the rules C shares are appropriate when used in an asset allocation strategy, I do not know of a fund family that is good at everything. Do you?



Hoping for major rebalancing? That's the only way C shares wouldn't get the attention of the suits in compliance. At least, at my firm.



I like C shares too. When the new "C share Guidelines" were first issued by my firm I rolled my eyes. My thinking was, you guys make more money on either A shares or MF wrap accts, so how convenient! But, from my friends around the industry, I've learned that this is coming from the NASD.




What do you mean by major rebalancing?


You're not serious, right?

Sep 29, 2006 9:43 pm

I know what rebalancing is, I am asking what you meant by hoping for major rebalancing? What exactly were in the guidelines?

Oct 2, 2006 12:21 pm

It is called "breakpoints" and "lowest expense ratio" idiot.


You have to find the right fit for each client, it may be an A for someone who intends to hold a fund for greater than 5 years.


It may be a C share for someone who wants more liquidity.


They pay us to figure that out.

Oct 2, 2006 7:53 pm

vbrainy if you re-read what you wrote you're not very clear. I know what my firms guidelines are I was asking what your firms were. Whose the idiot I cannot understand your english, I have two degrees I know how to read.



Oct 2, 2006 7:58 pm
bankrep1:

vbrainy if you re-read what you wrote you're not very clear. I know what my firms guidelines are I was asking what your firms were. Whose the idiot I cannot understand your english, I have two degrees I know how to read.


You don't have a firm.

Oct 2, 2006 11:46 pm
bankrep1:

vbrainy if you re-read what you wrote you're not very clear. I know what my firms guidelines are I was asking what your firms were. Whose the idiot I cannot understand your english, I have two degrees I know how to read.


But obviuosly not how to write!!

Oct 3, 2006 8:49 am

ha ha you spelled obviouslywrong!

Oct 3, 2006 9:16 am
bankrep1:

ha ha you spelled obviouslywrong!


Obvious and wrong are two different words and you should have a space between them.

Oct 3, 2006 11:51 am
Helter Skelter:
bankrep1:

ha ha you spelled obviouslywrong!


Obvious and wrong are two different words and you should have a space between them.



Dissin someone on the internet is harder than it looks. Did I spell dissin right?


Bank, my post about hoping for rebalancing is grounded in the fact that C shares aren't meant to be held for more than a few years. Thus there should be a rebalancing, selling and buying, to justify the higher holding cost. Actually, a good argument could be made for owning C shares as part of an asset allocation strategy. Still, five or six years down the road if there hasn't been significant movement of funds within the account C shares will become increasingly more difficult to justify.


I'm on your side, I think it's a bunch of crap, but I don't make the rules. If your firm is soft on this, go with it.


Any misspellings in this post were intentional.

Oct 3, 2006 12:19 pm
BondGuy:
Helter Skelter:
bankrep1:

ha ha you spelled obviouslywrong!


Obvious and wrong are two different words and you should have a space between them.



Dissin someone on the internet is harder than it looks. Did I spell dissin right?



It should be dissin'