As all to common on this board, people have a kneejerk reaction to loaded funds. They have their purpose -- and from what you say about your wife, they are perfect for here.If your wife goes with Vanguard, she will have to do all the research and the fund selection on her own. No one will call her to do quarterly or annual reviews. She has no one she can sit down with to discuss any of her concerns over her funds. No one can give her advice (Vanguard is not authorized to make recommendations). And lastly, no one will be there to advise her when to change her allocation.This is where an advisor comes in -- and this case, she found a really good one. The advisor will make a tiny bit of money from her Roth IRA; less than 5% of each of each purchase (and that goes down at $25K). American funds are considered some of the best in the industry and have 20 year return numbers to prove it -- which are much better than Vanguard numbers.More importantly, it is not so much about the fund he recommended, it is about the service he provides. Look at it this way, many people pay a CPA for their expert tax advice. $200 for helping with tax preparation, filing, and planning is a good price (it is what I pay). Having a license advisor give you input on proper investments for the same price (5% of $4k) seems reasonable as well. She can also seek his advise with any other investment question she may have.The advisor is doing a lot more than paperwork and cheerleading. He now has a feduciary responsibility for that money and he should be fired if the funds perform in a manner inconsistent with her goals. He can be criminally and civily liable if he gives bad advice; with unlimited liability. If you pick funds that do lousy, you have only yourself to blame. The advisor knows that if he does not give a good recommendation, she will take her money (and that $200 a year) to some place else.Your doctor certainly does a lot more than write a perscription. An advisor does as well.That fee is very typical. Most equity A shares are 5.25 - 5.75% with a break point starting at 25K (in the case of 5.75) and one starting at 50K (in the case of 5.25). Bond A shares can be from 2.5 to 4.5 starting out.Your wife should only buy A shares in a loaded fund as they are the cheapest in the long run. If she was investing for five years or less, then C shares might be appropriate.
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