Date: Thu, 16 Dec 2004 04:03:37 CST
Newsgroups: misc.invest.financial-plan
Subject: Re: Load vs No-load Mutual Funds
From: Mike 
	iQBVAwUAQcFde/l/I4+O31e5AQEtHAH9H+IGB3GM+pz1PeW0qQQqaRe8s+CJm1WG
	f17G7n4GzvW55UaSOWABls26zJwxfbGjLbf4IbanHDtDEmUoo00IzQ==
	=/Wf5

BreadWithSpam@fractious.net wrote in 
news:yobacsfpxbm.fsf@panix2.panix.com:


> *How* do you pay that planner?  Does he get paid by the
> hour, or by a percentage of your assets that me helps you
> with, or by commissions?

Initially I beleived it was a fee-based relationship, but I have come to 
realize that it is based upon commissions.  Other than a $40/year 
custodial fee for my Roth IRA (which is waived if I have like $50k or 
something), I pay nothing else.  So it has to be commissions.  I am 
confirming this with him.

I am not implying that my FA intentionally mislead me.  I cannot recall 
our initial conversation.  And to be honest, I was not quite as 
knowledgable as I am now (which is still not that much).  I'm trying to 
learn from my mistake.

And too his credit, if he is paid via commission, he has recommended 
some funds which are no-load, so I don't necessarily think he is a bad 
person.

> *Sometimes* there's a good reason to pay a load on a fund.
> In particular, that may be how you are paying that planner.

Other than paying for the planner, how are paying loads good?  It is a 
fee on your investment.  How can that be good?  I wouldn't even use 
compensation as justification that they are good.  It is a fee.  The 
price of doing business, if I buy loaded funds.

> If he's getting paid an hourly fee, then, no, those loads
> are probably not necessary and he should be steering you
> towards other things.  But if he is paid through those
> loads - *and* you have been *told* this - then there's
> nothing wrong with it.  You didn't think he was giving
> you all that advice out of the goodness of his heart,
> did you?

Does this mean that if he is paid via commission, that he should only 
recommend loaded funds?

And no, I did not think he was giving me advice for free.  But it is 
just as naive to think that I wouldn't try to maximize my benefit from 
him.  So if I can buy no-load funds from him, maybe I should.

> Loads are not inherently bad or good.  They are a means
> by which an advisor gets paid.  If the adviser is being
> paid another way (ie. he's fee-only), then those loads
> may well be a waste.  But if they are how he gets paid,
> then, so long as he's actually earning them by giving
> you advice, there's nothing wrong with it at all.

I agree that they are neither good or bad in that sense.  But if two 
funds are equal except that one charges a load, then I don't want to buy 
the loaded fund.  So if I have to, based upon my agreement with my FA, 
then I need to move my money elsewhere.

-- 
Mike