If someone told you that doing $200 DCA's into Roth IRA's is what you, as a rookie, should be doing, you need to pimp slap them. F mutual funds. Be different. Use UIT"s. They work better.

theironhorse,

You are in desperate need of a mentor.  

Do you sell insurance?  If so, you can make money with these small investors because of their ancillary needs.  If you don't, you will absolutely go broke.  It takes just as much time to help someone invest $200/month as it does to invest $100,000.

You may not have a choice in share classes.  Will your B/D allow you to use C shares for long term investments?  It's tough to justify them to many B/D's.

As for the UIT suggestion, that's tough to do because you may end up paying more in ticket charges then you earn in commissions.

The UIT suggestion does not apply to $200 DCA’s. With or without ticket charges, he won’t earn any money at that level of business.

anonymous-yes, I do a good deal of insurance(s).  life, di,
ltc.  I was trained at an insurance company initially, then got my
6 and 63 to sell funds, and after 4 years of it figured out I wanted
the 7/65 and that is what i have been doing for a little over a
year.  I realize those small DCA’s will not put food on the table,
but in my age group it is an easy sale, so I asked the question. 
I am also in the process of implementing quite a few SIMPLE’s with
local business owners and will have many “non affluent” contributors
which will need guidance.

At least you won’t have big income tax bills.

For what it's worth, I usually do A shares for this type of client. 

I hate B shares because they are too confusing, the only part people remember is no upfront commission.  When they come back in 2 years and need to sell, which some of them will even though they promised you they wouldn't touch this $$ before retirement, they will have no recollection about the surrender penalty, and will blame you for "lying" to them.

C Shares are ok, but you aren't even making minimum wage here.  2 other problems with C shares for this client.  First, if it is truly a long term investment, which these DCA's usually are, it's a bad deal for them.  Second, if you do too much of this biz as C shares, you won't survive long enough to be successful, and the higher commissions they are going to pay are going to go to your replacement.  (I inherited several accounts where my predecessors sold C shares.  Great for me, but the guys before me starved their way out of a career.)

These accounts are a pain in the a--, but early in the biz they can help you, and it lets you set up some automatic income.  At this point I don't really care one way or another about a few thousand coming in automatically every month spread over 30 different accounts, but I sure did care a couple of years ago. 

2 other benefits of these accounts.  First, if you survive long enough, eventually several of them will have rollovers or otherwise become more affluent and more worthwhile as clients.  Also, they give you practice.  I really screwed up some sales early in my career.  We all did, it's part of the learning process.  Go ahead and practice here, try some new things with your sales presentation.  If you screw up a $100 DCA sale, who cares?  Now you know not to try that when you have $100m on the table.

[quote=EDJ4now]I hate B shares because they are too confusing, the only
part people remember is no upfront commission.  When they come
back in 2 years and need to sell, which some of them will even though
they promised you they wouldn’t touch this $$ before retirement, they
will have no recollection about the surrender penalty, and will blame
you for “lying” to them.[/quote]



Since B shares have no advantages over C shares (other than eventuial
conversion to A shares, in 10 years) most places have quit offering
them. Too much abuse and NASD arbitration losses. Clients will be
royally pissed at the deferred sales charge.



A-shares are correct in all circumstances, except for short term investments, which should probably be done as ETF’s anyways.

For a long term investment, a "B" share can possibly be the best share class for a small investment.  The problem is that one will only know in hindsite which was better the "A" share or the "B" share.  The "B" share typically converts in a period shorter than 10 years.  Many "C" shares also convert, but in a longer time horizon than the "B" shares.

The small accounts are fine to do if you are going to get other business from the client.  What I typically do with a client who is going to be investing a small amount of money is take care of their insurance issues first.  If they won't do the insurance with me, or there is not an insurance need, I won't do the investments.  Every household has to be profitable. 

Sp,ething like

I prefer to work on fee basis our minimum is 100,000 for small accounts I use A shares until you get up to our minimum of 100,000