Wachovia pocketing 12b1 fees in Wrap accounts

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Mar 21, 2009 12:00 pm

Do any other firms pocket 12b1 fees in wrap fee accounts? I have just found out about Wachovia's policy. I thought we were rebating the fees to the client.

Mar 21, 2009 12:05 pm
ssirish:

Do any other firms pocket 12b1 fees in wrap fee accounts? I have just found out about Wachovia's policy. I thought we were rebating the fees to the client.

 
Not sure - I use almost all institutional class shares w/ no 12B1 or ETF's.
Mar 21, 2009 12:16 pm

We get the 12-b-1's if the funds used have them at SF

Mar 21, 2009 1:56 pm

12b1 fees beeing pocketed by firm is no different than AG edwards.  Stifel also pockets fees.

Mar 21, 2009 2:07 pm

my b/d does

Mar 21, 2009 3:18 pm

RJFS refunds all 12b1s in wrap accounts to the client. EDJ does as well (one thing they do right).

Mar 21, 2009 3:23 pm

My old bank program pocketed the 12b-1 fees.  From what I understand, a firm CANNOT keep 12b-1 fees in IRA wrap accounts.  LPL rebates those, but passes part of the wrap 12b-1 fto me for having at least $5 mil in their wrap program.

Mar 21, 2009 4:00 pm

Remember when Danny said Wachovia is different from other firms....this is what he meant...lol...they take more of your money than other firms! Scale and scope baby!

Mar 21, 2009 10:35 pm

BAI keeps them too. they did make an effort a year or two ago to make the accounts more client friendly as far as fees go. They allowed institituional shares for the money market position in a wrap account. They told us with a straight face that it was a demonstration of their commitment to their clients. cash is about 2% of most wrap portfolios.  what a commitment.  

Mar 21, 2009 11:47 pm
plarki12001:

12b1 fees beeing pocketed by firm is no different than AG edwards.  Stifel also pockets fees.



Actually you do get paid out on t12b1's within fee based accts at Stifel

Mar 22, 2009 8:36 am

Wachovia pockets 12b1 fees in Ira wrap fee accounts. They have said they will not let American funds f2 share class on the allowable list ( no 12b1) . Only the F1 share class where they can pocket the 12b1 fee. They limit the allowable list to only A shares for many fund families.Merrill Lynch allows the F2 share class.

Mar 22, 2009 10:40 am
ssirish:

Wachovia pockets 12b1 fees in Ira wrap fee accounts. They have said they will not let American funds f2 share class on the allowable list ( no 12b1) . Only the F1 share class where they can pocket the 12b1 fee. They limit the allowable list to only A shares for many fund families.Merrill Lynch allows the F2 share class.

 
This is correct - no American Fund F2 shares.
 
Don't care what other firms do...this is extremely dishonest, IMO.
Mar 22, 2009 10:54 am

It would be interesting to see a study done at all the firms to figure out what your "real" payout is.  The payouts listed on registered rep mag are just spin from their corresponding firms, with each trying to out do each other.  If you are supposed to get a 40% payout, it should be on every dollar, quit playing games.

Mar 22, 2009 11:18 am
mnbondguy:

It would be interesting to see a study done at all the firms to figure out what your "real" payout is.  The payouts listed on registered rep mag are just spin from their corresponding firms, with each trying to out do each other.  If you are supposed to get a 40% payout, it should be on every dollar, quit playing games.




Exactly! This was one thing I took into considerantion when moving, I alwasy kept track of my 'real payout' At AGE it was aleasy 37-40%, I figured based on the new Wachovia rules it would drop to 32% or so when factoring in the ticket charges and 0 payouts...so far I have averaged over 40% at SF my first 2 months Most people don't take into consideration all the hidden BS..all the trails you dont get paid on, 0 payouts, ticket charges, haicuts etc, lowers payouts alot over what mgmt try's to tout. I could care less how much Deferred comp raises my payout, what if the company or me isnt there to collect it, that doesn't matter, all I care is how much ends up in my pocket every month!

Mar 22, 2009 4:44 pm

Remember early last year when Wachovia accidently paid out the F1 share 12b-1 fees along with regular American fund trails and then they took them back?  They had to come clean and everyone figured out what they were getting nicked for.

 
Mar 22, 2009 5:07 pm

That's pretty messed up not returning it to the client. They are paying you a management fee already, why should you screw them with more fees behind their backs? For funds used at SB, they are either waived, institutional shares, or credited back to the client.

Mar 22, 2009 10:15 pm

Mr Big, how is that screwing the client?  Some advisors and firms will charge 1.25% to 1.5% for the wrap and then refund the 12b-1's.  Others, like me and my firm, charge 1% and keep the 12b-1's.  Not sure what the problem is here.

Mar 22, 2009 10:24 pm

Stifel does not pocket. On qualified accts they are cedited to the cust account. Non qual go to broker

Mar 23, 2009 12:10 am

As long as you're telling the client what they are paying, then no bog deal. You're telling me your clients know that you are charging them 1% and then another quarter, or do they think you are charging them just 1%. You charge what you charge, if it's 2% and your client knows it, then great for you! I'm not telling anyone what to charge.

Mar 23, 2009 11:56 pm

Wachovia allows I shares in many cases - if you use A shares instead of I shares where available you are an idiot inside of wrap programs.