What firm will be receiving the ACAT?

over 2%…nice. now that is a wrapper

Wow, talk about getting...uhhhhhhh, taken!

It would surprise me if this client's investment is more than what he/she started with. (I'm guessing they started with $100,000.)

I figure annual fees of about 2.5% per year (including estimated annual MF charges). Add to that, front-end loads and you've got enough to make lease payments on a 5-series Beemer for 12 months. After that, switch'em to another A-share fund, renew your lease, and drive happy......all the way to arbitration!

Babbs and Newbie--

I had a similar situation that I ran across.  I sent the ACAT to an out of state broker working as an independent under the AIG nameplate.  There had been no activity in the account (buys, sells, re-balances, re-allocations, money added, money taken out) in more than two years.

I came across a B share acct that had a 1.5% wrapper on it.

Brilliant .

Looney- First of all, your posts are generally excellent.

I think you are taking this situation a bit too seriously.  The fee-based account avoided the A-share load, and hopefully the advisor put them in good funds.  Granted, 2.25% to buy/hold funds seem quite excessive.  I generally charge around 1%, depending on the amount.  In fact, I've brought in accounts, filled their portfolios with A-share funds, and cancelled the "fee" after a year, as I can't stomach taking ongoing payment in this situation.  Still, they were well served by me in the interim, and avoided the 4-5% loads.

Dude- don't be too quick to bash B-shares w/ a wrapper.  Likely, the account was transferred in, and the broker while not wanting the client to incure 3-5% back-end loads wanted to get paid for the advice & servicing the account.  IMO nothing unethical about that.  Better that than selling all the B shares and putting eveything an an annuity to "defer taxes" whil we all know that is done to collect a big $$ w/out causing a switch letter.

The account I am referencing charged the load and then a wrap.  To be fair, they hit a significant and meaningful breakpoint, but still a double whammy. 

[quote=The Judge]

Looney- First of all, your posts are generally excellent.

I think you are taking this situation a bit too seriously.  The fee-based account avoided the A-share load, and hopefully the advisor put them in good funds.  Granted, 2.25% to buy/hold funds seem quite excessive.  I generally charge around 1%, depending on the amount.  In fact, I've brought in accounts, filled their portfolios with A-share funds, and cancelled the "fee" after a year, as I can't stomach taking ongoing payment in this situation.  Still, they were well served by me in the interim, and avoided the 4-5% loads.

Dude- don't be too quick to bash B-shares w/ a wrapper.  Likely, the account was transferred in, and the broker while not wanting the client to incure 3-5% back-end loads wanted to get paid for the advice & servicing the account.  IMO nothing unethical about that.  Better that than selling all the B shares and putting eveything an an annuity to "defer taxes" whil we all know that is done to collect a big $$ w/out causing a switch letter.

[/quote]

Nope.......client bought the mutual funds from the broker.

Dude- Obviously; you can’t buy B-shares in a fee-based account. So what you’re saying is the broker bought B-shares, THEN convinced the client to pay an annual fee?  What a scumbag…

[quote=The Judge]

Looney- First of all, your posts are generally excellent.

I think you are taking this situation a bit too seriously.  The fee-based account avoided the A-share load, and hopefully the advisor put them in good funds.  Granted, 2.25% to buy/hold funds seem quite excessive.  I generally charge around 1%, depending on the amount.  In fact, I've brought in accounts, filled their portfolios with A-share funds, and cancelled the "fee" after a year, as I can't stomach taking ongoing payment in this situation.  Still, they were well served by me in the interim, and avoided the 4-5% loads.

Dude- don't be too quick to bash B-shares w/ a wrapper.  Likely, the account was transferred in, and the broker while not wanting the client to incure 3-5% back-end loads wanted to get paid for the advice & servicing the account.  IMO nothing unethical about that.  Better that than selling all the B shares and putting eveything an an annuity to "defer taxes" whil we all know that is done to collect a big $$ w/out causing a switch letter.

[/quote]

Please explain how do you avoid a load by buying A shares? You can't.  If they were to avoid a load they would be R shares or no loads in the account.  No.... what they did was charge the client to buy the A shares when they rolled out of a qualified plan, and then transferred them into a advisory account at a later date. 

Nice.

not true, most wrap programs allow you to buy a-shares and no-loads @ nav, no conflict of interest there.

BL- It depends on the family of funds, but w/ most wrap accounts you purchase A shares at NAV.  The broker doesn’t receive the 25 bps trail, in addition to the flat fee being charged.  I know American Funds uses Class F shares, but many still use class A.

BL- I just put money into A- shres in a fee based account. Bought @NAV because no f-shares available. That is how you avoid paying a sales load on A shares.

BTW, some wrap programs allow you to keep the 12b-1 or refund it back to the customer. 1% would only be .75% to the client if rebated, a very good selling point.

Thanks…my mistake.   I had only heard of R shares.  Obviously I am not fee based…yet.

[quote=babbling looney] Thanks...my mistake.   I had only heard of R shares.  Obviously I am not fee based.......yet.[/quote]

...just goes to show even the best among us aren't infallable...

BL, you'll love fee-based when you get there...it's amazing what's available to your clients...I'm just starting to introduce managed futures to my fee-based clients...an interesting, non-corrolated diversification tool...

[quote=Indyone]

[quote=babbling looney] Thanks...my mistake.   I had only heard of R shares.  Obviously I am not fee based.......yet.[/quote]

...just goes to show even the best among us aren't infallable...

BL, you'll love fee-based when you get there...it's amazing what's available to your clients...I'm just starting to introduce managed futures to my fee-based clients...an interesting, non-corrolated diversification tool...

[/quote]

I am looking forward to being able to offer fee based accounts, however, am still wondering how many of my clients would be suitable for this.  Just guessing that only 30% of my base would switch.  I do think that I would be able to pull in some more active accounts and younger clients with this strategy. 

I like the idea of being able to better control my clients portfolios by offering some of the excellent no load funds available, strategies like you have mentioned and being able to make changes in the porftoio without the clients suspecting that I am just trying to make a commission.

Since I have some other things on my plate right now, I don't think I will sit for the exam until later this year.  So then.....we shall see. 

[quote=babbling looney][quote=Indyone]

[quote=babbling looney] Thanks...my mistake.   I had only heard of R shares.  Obviously I am not fee based.......yet.[/quote]

...just goes to show even the best among us aren't infallable...

BL, you'll love fee-based when you get there...it's amazing what's available to your clients...I'm just starting to introduce managed futures to my fee-based clients...an interesting, non-corrolated diversification tool...

[/quote]

I am looking forward to being able to offer fee based accounts, however, am still wondering how many of my clients would be suitable for this.  Just guessing that only 30% of my base would switch.  I do think that I would be able to pull in some more active accounts and younger clients with this strategy. 

I like the idea of being able to better control my clients portfolios by offering some of the excellent no load funds available, strategies like you have mentioned and being able to make changes in the porftoio without the clients suspecting that I am just trying to make a commission.

Since I have some other things on my plate right now, I don't think I will sit for the exam until later this year.  So then.....we shall see. 

[/quote]

I'm sorry you've given your clients a reason to suspect that you're just trying to earn a commission. You should put them in an asset based fee account, so they can think your trying to make money off of them every second of every day, in perpetuity.

I work for Bank of America and we have a fundstratiges program that charges 1.5 % on the first 250k. We do select the funds for the model portfolio every qtr and change if needed. and rebal every qtr. With the mangt expense of the funds it is about 2.40% total. This is one of the fee based programs that managment push. I am looking at LPL and Wachovia. What fee based programs do they have and what would you guys suggest? What fee structure is most fair? Thoughts?