The Mutual Fund Store

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Dec 11, 2008 12:33 am

[quote=jkl1v1n6]

So you know they have an account at the mutual fund store.  Have you asked them why?  Based off of their answer try to come up with something brilliant.  Or you could just offer up that you can handle those same funds in the account that they have with you already.  See what they say.  That may or may not be a light bulb for the client.  Awful nice to know where those clients have 1.3mm for future reference. 

[/quote]   That's great advice, whateverthehellyournameis, but that ain't how this story's gonna end.   Those funds will be liquidated so fast it'll make your head swim--before they get to Jones, of course--and then the cash is going into Advisory Solutions or A shares.   Trust me on this one.
Dec 11, 2008 12:59 am

Is it just me or does anyone else feel like “The Mutual Fund Store” is about the Kraft Macaroni and Cheesiest firm name you’ve ever heard?  Why not call yourself Fund-Mart Investment Management or Funds R Us?  Apparently, $40 billion dollar’s worth of clients think it’s just fine, but it sounds pretty gay to me.

Dec 11, 2008 1:16 am

[quote=Indyone]Is it just me or does anyone else feel like “The Mutual Fund Store” is about the Kraft Macaroni and Cheesiest firm name you’ve ever heard?  Why not call yourself Fund-Mart Investment Management or Funds R Us?  Apparently, $40 billion dollar’s worth of clients think it’s just fine, but it sounds pretty gay to me.[/quote]
That would only be about $4 B in AUM (if one can use the word “only” when speaking of $4 B), not $40 B.  Still a lot.

And FWIW, I recall having the same reaction to the name when I first saw it.  I still don’t like it, but you can’t argue with the results he’s achieved.  Walmart is a pretty goofy name too, when you think about it. 

Dec 11, 2008 3:48 pm

True enough Borker boy!

Dec 11, 2008 4:04 pm

[quote=bspears]

I think this guy has a great niche.  We can find bad in anything out there, but this guy is a true entreprenuer.  Same as Fisher Investments and Ron Carson.  They develop a business model and push it, kinda like doorknocking all day.  Leave it up to a joneser (rankstocks) to bash the store, makes them feel better.  Its bread into the culture. 

So...Spiffy, what makes you think you can do these clients any good in this environment?  Is this to better their portfolio (they offer some great funds) or to better your gross for January?[/quote]   He does have a great marketing plan.  And it obviously works for him.  So as far as that goes he is a great businessman.    As to rank's post, since I didn't hear that particular discussion on the radio I don't have the ability to say whether it's true or not.  But the couple of times I've caught the guy on the radio in the past, he's never gone out of his way to say anything nice about EDJ.  So, if that's what rank heard, then I would completely understand why he said what he did.    I don't have much to complain about with these folks about the funds they own.  Some of them are funds I use (OIBAX, OPSIX) in my own portfolios.  Some of them are funds in our Advisory Solutions platform (OIBAX, MADVX, EXEYX).  Now, I do have issues with his asset allocation.  In the couple of portfolios I've seen, he only uses high yield and strategic income type bond funds.  No treasury or highly rated bonds to speak of.  He also tends to lean more to the aggressive side.  At least according to the Jones model and the people I've had meetings with.  Maybe that works great in good markets, but not so well in markets like this.    So, what can I do to help them in this environment?  Well, one of the couples I suggested they take what money they have in the MFD Store and move it into a VA with an income rider.  In July.  The wife is on board, but the husband said he doesn't see the value.  And he can't see paying me a commission in a down market.  Now their account is down 40%.  But, Adam Bold doesn't believe in VAs, so there's no benefit to them.    So, different investment strategies, actual planning, better service, and of course my smiling face are all things I think I can deliver to these people.  I've known that all along.  My purpose with this original post was to maybe learn something else that I can use.  Thanks for all of the great, and not so great, responses. 
Dec 11, 2008 4:05 pm

[quote=Borker Boy][quote=jkl1v1n6]

So you know they have an account at the mutual fund store.  Have you asked them why?  Based off of their answer try to come up with something brilliant.  Or you could just offer up that you can handle those same funds in the account that they have with you already.  See what they say.  That may or may not be a light bulb for the client.  Awful nice to know where those clients have 1.3mm for future reference. 

[/quote]   That's great advice, whateverthehellyournameis, but that ain't how this story's gonna end.   Those funds will be liquidated so fast it'll make your head swim--before they get to Jones, of course--and then the cash is going into Advisory Solutions or A shares.   Trust me on this one.[/quote]   Borker, most likely, many of the funds are advisor-class shares and would have to be liquidated unless they were held in the advisory program at Jones.  Most load-waived and institutional share classes cannot be held outside of advisory platforms.  Not sure what share classes they use, but just a thought.  I know when I've brought some funds from other firms that were in advisory, I could not hold many of them.   Good attitude, by the way.
Dec 11, 2008 4:05 pm

[quote=Borker Boy][quote=jkl1v1n6]

So you know they have an account at the mutual fund store.  Have you asked them why?  Based off of their answer try to come up with something brilliant.  Or you could just offer up that you can handle those same funds in the account that they have with you already.  See what they say.  That may or may not be a light bulb for the client.  Awful nice to know where those clients have 1.3mm for future reference. 

[/quote]   That's great advice, whateverthehellyournameis, but that ain't how this story's gonna end.   Those funds will be liquidated so fast it'll make your head swim--before they get to Jones, of course--and then the cash is going into Advisory Solutions or A shares.   Trust me on this one.[/quote]   And what would you do with it, oh wise one?    B24 is right.  Some of them can't be held at Jones, so if I want those people as clients, and they want me as their advisor, they'll have to be liquidated before they come to Jones. 
Dec 11, 2008 4:05 pm

Long story short…churn and burn baby!!!

Dec 11, 2008 4:54 pm

Your repositioning is a commission comment. - Bspears

  I guess is I charged commission on everything like you do at Jones it would be. But it doesn't cost the client anything to reposition and find better investments, I am not making anymore money by repositioning the assets than I am by keeping their same assets.   Are you grumpy because all of the preferred funds crashed? And did so worse than if your clients had just purchase the index?
Dec 11, 2008 5:08 pm

spears doesn't work for Jones anymore, so he doesn't charge people commissions to move money to him.   Evidently he works for free at LPL. 

Not to get this thread any more off track than it already is, but which index are your referring to?  And which preferred funds specifically are you referring to?  When you say "all of the preferred funds crashed" you're paiting with a pretty wide, and inaccurate, brush.  I'll give you an example.  In the growth and income category we have 18 preferred funds.  7 of them are down more than the S&P, Russell 1000, and the Morningstar Large value index as of the end of Nov.  I'm sure if I took the time to look the rest of them, I'd find the same thing.  So, saying that clients would have been better off buying the index is an inaccurate, and foolish, statement.  Perhaps you should clarify what you really meant to say.
Dec 11, 2008 5:28 pm

I can't find my damn list... But shooting in the dark, I would say 95% Putnam, 80% Van Kampen, 75% (Franklin, Goldman)

And by index not just the S&P 500, but add in every other index(it seems etfs are the cheapest way to go about this now).   I don't disagree that "some" actively managed funds have achieved better results, however most of those aren't on the Jones preferred list.  And it was more of a shot at Spears, for the "repositioning statements is for commissions" comment.    
Dec 11, 2008 5:35 pm

Ice - I knew you’d throw your hat into this ring.  I’ve actually been giving some thought to the whole index vs active fund idea.  Seems that when you run our Advisory Solutions ETF/Index model against our fund based model for the last year (I know, short term, but I can’t go back 5 years with historical data with the ETFs) the ETF platform outperforms.  By 5% to boot.  Makes a very happy managed money guy scratch his head.  And to bring this back to the MFS, if Mr. Bold thinks they’re bad, I guess it’s one way I can talk with these folks and offer them something different. 

  And Squash's comment about all of the preferred funds being down more than "the index" is absolutely inaccurate and foolish.    You, however, may be right.  I guess if I only work with .xx% of the people out there and let you have the rest of them I can just keep going about my business as usual.  
Dec 11, 2008 5:45 pm

[quote=Squash1]

I can't find my damn list... But shooting in the dark, I would say 95% Putnam, 80% Van Kampen, 75% (Franklin, Goldman)

And by index not just the S&P 500, but add in every other index(it seems etfs are the cheapest way to go about this now).   I don't disagree that "some" actively managed funds have achieved better results, however most of those aren't on the Jones preferred list.  And it was more of a shot at Spears, for the "repositioning statements is for commissions" comment.    [/quote]   Putnam - not a preferred fund any longer.  Jones just sent an email to all of us basically telling us to get out of Putnam.    Goldman and Franklin - Wrong again.  Perhaps if you reverse your percentages you'd be more in line.    Van Kampen - Maybe half of them are worse than their indexes right now.  I don't use them a lot anymore, so I don't follow them too much.  I just took a quick look at my chart.    And I agree, ETFs are the cheapest way to go about this now.  Perhaps not the best (sorry ice, I'm not quite with you yet), but certainly the cheapest.          
Dec 11, 2008 5:49 pm

Spiff,

Didn't you answer your own question a little bit ago.  Nothing wrong with funds but your asset allocation isn't what you'd recommend.  There's your angle, then show them what you can do and why.  I don't know anything about Jones' Advisory platform but isn't it around 1.5%, that's not horrible for fees, unless that's before fund expenses, and my guess is you could show him how you could keep some of the funds that he's in.
Dec 11, 2008 6:05 pm

Sorry I don’t get the updates anymore on the LIST, I have my list from 2 years ago.  Hey is Van Kampen Strategic Growth(or whatever fund it is now) still on the list…

Dec 11, 2008 6:44 pm

[quote=Spaceman Spiff][quote=Borker Boy][quote=jkl1v1n6]

So you know they have an account at the mutual fund store.  Have you asked them why?  Based off of their answer try to come up with something brilliant.  Or you could just offer up that you can handle those same funds in the account that they have with you already.  See what they say.  That may or may not be a light bulb for the client.  Awful nice to know where those clients have 1.3mm for future reference. 

[/quote]   That's great advice, whateverthehellyournameis, but that ain't how this story's gonna end.   Those funds will be liquidated so fast it'll make your head swim--before they get to Jones, of course--and then the cash is going into Advisory Solutions or A shares.   Trust me on this one.[/quote]   And what would you do with it, oh wise one?   I realize you'll retort that "you don't work for free," but since they have access to as many funds (probably many more) as you do, why not do just a tad of pro bono work and give them a little advice on how you'd allocate them in what they already own? I know you're salivating at the idea of bringing over the assets, but could you advise someone to sell right now and still sleep at night?   Advisors are just as culpable in hurting investors' returns as DIYers are due to our constant hunt for something to liquidate and transfer. We preach buy and hold, but we're constantly looking for accounts to liquidate, transfer in and then reinvest.    All for the sake of one more fat commission.   B24 is right.  Some of them can't be held at Jones, so if I want those people as clients, and they want me as their advisor, they'll have to be liquidated before they come to Jones.  [/quote]    
Dec 11, 2008 7:38 pm

[quote=Borker Boy][quote=Spaceman Spiff][quote=Borker Boy][quote=jkl1v1n6]

So you know they have an account at the mutual fund store.  Have you asked them why?  Based off of their answer try to come up with something brilliant.  Or you could just offer up that you can handle those same funds in the account that they have with you already.  See what they say.  That may or may not be a light bulb for the client.  Awful nice to know where those clients have 1.3mm for future reference. 

[/quote]   That's great advice, whateverthehellyournameis, but that ain't how this story's gonna end.   Those funds will be liquidated so fast it'll make your head swim--before they get to Jones, of course--and then the cash is going into Advisory Solutions or A shares.   Trust me on this one.[/quote]   And what would you do with it, oh wise one?   I realize you'll retort that "you don't work for free," but since they have access to as many funds (probably many more) as you do, why not do just a tad of pro bono work and give them a little advice on how you'd allocate them in what they already own? I know you're salivating at the idea of bringing over the assets, but could you advise someone to sell right now and still sleep at night?  - Yes.  It's not like we're telling people to move money out their mutual funds and put it in cash for the rest of their lives.  Or moving to something that is at it's 52 week high.  It's a sell low, buy low process.  It's the same thing I'd do if the market weren't down 40% this year.  It's just like when I moved my checking account from Commerce Bank to US Bank.  My checkbook changed, but not the amount of cash I had.  If I were only looking at it from a commission standpoint, I'd tell them to leave it where it is and come back to me when it grows back to what it was before.  That way I'd get paid what I originally thought I was back in August.    The other problem with that scenario and this particular thread is that the MFS uses some pretty obscure fund families that may only have one or two funds in their lineup.  Sure, if someone transfers in say, Pioneer, I could shuffle some things around that fund family and do the work for no cost.  But if it's FBR, who only has 10 funds total, and a bunch of them are niche funds, you're kind of stuck.  So, you do what you have to do.  Also, I don't want to look up one day after 5 and find that I've got 300 different funds out there that my clients own and I'm now responsible for tracking.  I just choose to run my business differently.        Advisors are just as culpable in hurting investors' returns as DIYers are due to our constant hunt for something to liquidate and transfer. We preach buy and hold, but we're constantly looking for accounts to liquidate, transfer in and then reinvest.    All for the sake of one more fat commission.   B24 is right.  Some of them can't be held at Jones, so if I want those people as clients, and they want me as their advisor, they'll have to be liquidated before they come to Jones.  [/quote]    [/quote]   I'm continually amazed at what I perceive as anti broker statements.  Like the "one more fat commission" one.  Perhaps it's just anti-Jones.  But you really need to figure out who you want to work for or what industry you want to be in.  I can't imagine making a living doing what we do with thoughts like that floating through my head.   
Dec 11, 2008 7:46 pm

[quote=iceco1d]Borker,


I must be missing something here.  Can't you guys transfer directly into your Advisory platform?  Then tweak what you want, liquidate, hold, rebalance, whatever it is that you want to recommend?    Furthermore, do you see a problem with that?  Hell, what if you leave 90% of the portfolio where it is, but the client wants to come to you because you'll help them with X, Y, Z also...whats the problem there?  Maybe I'm missing something.    [/quote]   Without knowing what the MFS clients own, I can't comment as to whether they'll transfer. But if 90% of the funds would transfer in kind, then that's obviously a totally different situation.   (And in the future, please refer to me as Oh Wise One.)  
Dec 11, 2008 7:47 pm

I’m more anti-criminal than anything. Sorry I stepped on your toes.

Dec 11, 2008 7:53 pm

I see this as …SPiffy=Darth Vader and Borker=Luke Skywalker…