The Motley Fool Discussion Boards

Previous Page

Investing/Strategies / Retirement Investing

URL:  https://boards.fool.com/gtgt-just-because-someone-gets-paid-an-hourly-23346590.aspx

Subject:  Re: Retire rich Date:  11/26/2005  12:46 AM
Author:  rrosenkoetter Number:  48422 of 95794

>> Just because someone gets paid an hourly rate for their advice does not mean their advice is any better than someone that gets paid based on the transaction. <<

-------------

The problem is... the one who is paid an hourly fee will choose the best fund for you from all the funds in the world...

The one who gets paid a commission, even if he or she is completely honest, will choose the best fund for you from the list of funds that pay commissions

You will never be told about Vanguard's and Fidelity's super low fee index funds from a commision based broker... The odds are very very good you will be placed in funds that have much higher (1%-1.5%) fees than equivalent funds at Vanguard.

The broker will NOT think he or she is doing you a disservice. Most of them have convinced themselves that the funds they place you in with the higher fees are BETTER than the low-cost funds out there, and worth the extra money...

They are wrong however... For EVERY fund out there that charges an up-front sales charge or seven years of back-end 12b-1 management fees, there is a low-cost equivalent fund that does better over the long run because it has a 1.5% advantage over the expensive fund.

Most commission-based brokers are not evil... They're just ignorant... (That of course is a broad generalization with no research to back it up...)
Copyright 1996-2019 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us