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Location: When things get hot they expand. Im not fat. Im hot.
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Originally Posted by Pilgrim21784
I suggest you avoid any load funds entirely, the load is simply an unnecessary fee you don't need to pay. There are many fine funds available from no-load companies (Vanguard, T Rowe Price, etc.). An advisor who recommends load funds is working for his/her interests and not yours. Use a fee based advisor only, you will be much better off. Be aware that bond funds in a low interest rate environment are very dangerous if rates start to rise. JMO.
I did ask about the load. Its a deferred load. Im pretty sure he said if I kept the fund for a year it would go away. Ill be sure to get this confirmed if I use these funds.
I did ask about the load. Its a deferred load. Im pretty sure he said if I kept the fund for a year it would go away. Ill be sure to get this confirmed if I use these funds.
I explained how C shares typically work. I've never heard of the load "going away" after the first year with C shares, only with A shares (which are front-end loads). If he's telling you otherwise, get it in writing.
Location: When things get hot they expand. Im not fat. Im hot.
2,513 posts, read 6,323,996 times
Reputation: 5317
Quote:
Originally Posted by LongArm
I explained how C shares typically work. I've never heard of the load "going away" after the first year with C shares, only with A shares (which are front-end loads). If he's telling you otherwise, get it in writing.
Yes you did and I believe you. But. I just looked it up a couple places to be sure. Now this is confusing. Just to be sure I rechecked both funds on Morningstars site. ( Never trust packets of printed stuff without verification.) It says they have deferred loads. I looked up deferred load. It says if you hold the fund for a certain period there is no load. I will add this to my list of questions. Im making a list so I dont get distracted and forget stuff.
Im off to see what I can find about deferred load c-shares. And to do some more checking on these two funds. Now Im curious. Just why does he feel these funds are best for me. And if I REALLY get to know them will I feel the same.
I echo all advice against load funds. It's almost like a basic litmus test for the financial advisor: an automatic and utter negative, grounds for immediate end of the relationship. Never, ever pay a mutual fund load.
The Vanguard Total Bond Index fund is the best choice. You're not that old. Perhaps you should follow the investing advice of John Bogle, the Vanguard founder, who recommends to invest your age in bonds and the rest in stocks. A mix of 60 % in the Total Bond Index and 40 % in the Total Stock Index would be good. The Boglehead forum is a great place to get solid, safe investment advice. Google Boglehead forum and take a look.
3:Are you registered with our state securities regulator? Have you ever been disciplined by the SEC, a state regulator, or other organization (such as the Financial Industry Regulatory Authority (FINRA) or one of the stock exchanges)?
4: How many mutual funds do you offer? Is there a preferred group among them?
5: Are there special sales incentives that you will receive for selling me this fund?
6:Why are you proposing I buy this particular class of mutual fund shares?
7:Is there a redemption fee on this fund? How does it work?
8: Does this investment match my investment goals? Why is this investment suitable for me?
9:How will this investment make money? (Dividends? Interest? Capital gains?) Specifically, what must happen for this investment to increase in value? (For example, increase in interest rates, real estate values, or market share?)
10:What are the total fees to purchase, maintain, and sell this investment? Are there ways that I can reduce or avoid some of the fees that I'll pay, such as purchasing the investment directly? After all the fees are paid, how much does this investment have to increase in value before I break even?
11:How has this fund performed over the long run? Where can I get an independent evaluation of this fund
12:What specific risks are associated with this fund?
13:What type of securities does the fund hold? How often does the portfolio change?
14: Does this mutual fund invest in any type of securities that could cause the value to go up or down rapidly in a short period of time? (For example, derivatives?)
15:How does the fund perform compared to other funds of the same type or to an index of the same type of investment?
16:How much will the fund charge me when I buy shares? What ongoing fees are charged? How much will the fund charge me when I sell shares?
17:Is the fund portable? If I move my assets to another firm, will I be able to continue holding the fund or will I need to liquidate it?
18:How do you get paid? By commission? Amount of assets you manage? Another method?
If you want to ball-bust you can him the following questions:
Do you make more if I buy this mutual fund rather than another? If you weren't making extra money, would your recommendation be the same?
Are you participating in a sales contest? Is this purchase really in my best interest, or are you trying to win a prize?
Have you personally been involved in any arbitration cases? What happened?
Now this is confusing. Just to be sure I rechecked both funds on Morningstars site. ( Never trust packets of printed stuff without verification.) It says they have deferred loads. I looked up deferred load. It says if you hold the fund for a certain period there is no load.
Well, PIFCX does have a deferred load for the first year. But that's not the load I'm referring to. Look at the expenses for PIFCX on Morningstar. It has a 12b-1 fee of 1%. Any 12b-1 fee over .25% is considered a LOAD, and this load is paid by you every year. This is how folks are often fooled into thinking they're not paying a load for C shares when they really are. I'm shocked that your advisor didn't explain that to you. (Uh, not really.)
So the total expense ratio for PIFCX, including the 12b-1 fee, is a whopping 1.36%. That same fund, but of the A-share variety, has a total expense ratio of "only" .86%, which is much lower than the C shares, but still higher than you want for a bond fund. Compare that to the aforementioned Vanguard Total Bond Market Index fund which has an expense ratio of just .22%! As I alluded to before, when bond funds are averaging only around 5-6% per year, a 1%+ difference in expenses is huge.
Quote:
Im off to see what I can find about deferred load c-shares. And to do some more checking on these two funds. Now Im curious. Just why does he feel these funds are best for me.
In the loaded fund world, C shares are best for investors who won't be holding the fund a long time, and worst for those who will. Perhaps he had reason to believe you may not be in it for the long haul...or perhaps he just wanted to make the most money off of you over time. It's most likely one or the other. Or both.
FBone posted some great questions to ask your advisor. You might also pin him down on the 12b-1 fee (the "real" load) and watch him dance his way out of that one.
Location: When things get hot they expand. Im not fat. Im hot.
2,513 posts, read 6,323,996 times
Reputation: 5317
Quote:
Originally Posted by LongArm
Well, PIFCX does have a deferred load for the first year. But that's not the load I'm referring to. Look at the expenses for PIFCX on Morningstar. It has a 12b-1 fee of 1%. Any 12b-1 fee over .25% is considered a LOAD, and this load is paid by you every year. This is how folks are often fooled into thinking they're not paying a load for C shares when they really are. I'm shocked that your advisor didn't explain that to you. (Uh, not really.)
So the total expense ratio for PIFCX, including the 12b-1 fee, is a whopping 1.36%. That same fund, but of the A-share variety, has a total expense ratio of "only" .86%, which is much lower than the C shares, but still higher than you want for a bond fund. Compare that to the aforementioned Vanguard Total Bond Market Index fund which has an expense ratio of just .22%! As I alluded to before, when bond funds are averaging only around 5-6% per year, a 1%+ difference in expenses is huge.
In the loaded fund world, C shares are best for investors who won't be holding the fund a long time, and worst for those who will. Perhaps he had reason to believe you may not be in it for the long haul...or perhaps he just wanted to make the most money off of you over time. It's most likely one or the other. Or both.
FBone posted some great questions to ask your advisor. You might also pin him down on the 12b-1 fee (the "real" load) and watch him dance his way out of that one.
Yes FBone did post some good questions. Ive already checked on some. Others I need to. Im adding them to my list.
To be fair Ive only spoke with him twice on the phone. Once to give him background. The second time he gave me his recommendations and said he would mail the info for me to look over and then we could meet and discuss. I havent set up the meeting yet. I wanted to cram a little knowledge in before I meet this guy. Its hard to make an informed decision when you have no idea what the Hell your looking at. Thats why Im here askin stupid questions. And checking out LOTS of sites. Thanks to you guys its making more sense now.
I will be using this money between 62 and 65. I have an annuity that kicks in at 65. From what Ive read about c-shares Im guessing this is why he picked them because of the short term. I will be asking him why loaded funds tho.
I assume this advisor works for a full-service brokerage? Virtually all of these people recommend nothing but load funds because that's how they make money. They're really salesmen more than advisors and the load is their commission for the funds they're selling you. I'm sure some are actually quite knowledgable and will try to do what's best for their clients--but only as long as they're making money for themselves too, and that means load funds. There's an inherent conflict of interest there and that's just the way it is.
I wrote a while ago about how the vast majority of funds sold at Edward Jones come from just 8 (I believe) load fund families. Just eight! Perhaps there are only 8 decent fund families in the universe and THAT is why the Edward Jones "advisors" push these funds on their clients? Of course not. In addition to the loads, Edward Jones receives additional compensation known as "profit sharing" for selling funds from these 8 fund families. (This info is posted on Edward Jones' own website, BTW.) Think these guys are going to recommend a low-cost Vanguard fund? Think again.
If you need advice, I second what someone else already suggested and that is speaking to a FEE-ONLY advisor. They have no reason to steer you into anything that's not in your best interests, unlike the salesmen at a brokerage. How often do you think objective fee-only advisors recommend load funds? Not a lot.
Oh, and BTW, there are no stupid questions. The ones you're asking certainly are not.
Ill be 60 on my BD. Im semi retired and I have small amount $30000 that Im thinking of investing in bond funds. Im having trouble figuring them out. Ive read a lot and learned a lot but Im still having trouble figuring out just how much they pay and when. All the funds show long term growth of $10000 from 1999 to 2009. What Id like to know is if I put $10000 in today how much will it earn monthly/quarterly yearly.
AllianceBern Global Bond C and Dryden Short-Term Corporate Bd C have been recommended to me by my possble new advisor. When I do my go to meet Id like to at least sound like I know what Im doing.
Your "new advisor" is NOT an advisor, but a salesman. He is trying to sell you funds which are in his best interest, not yours. Dump him. Go see a fee based Registered Investment Advisor/CFP/RFP. He/she is legally obligrated to put your interest first. Drop anyone who recommends loaded funds. Solid advise is hard to come by. Start with a fee based/fee only advisor.
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Now this is confusing. Just to be sure I rechecked both funds on Morningstars site. ( Never trust packets of printed stuff without verification.) It says they have deferred loads. I looked up deferred load. It says if you hold the fund for a certain period there is no load. I will add this to my list of questions. Im making a list so I dont get distracted and forget stuff.
