Skip to main content
Message Font: Serif | Sans-Serif
No. of Recommendations: 1
would bet that the financial advisor would say I was a great client - I didn't know what he was doing, didn't ask about what he did, and when he told me that there was no fee for buying the shares I didn't think to ask whether there was a fee for selling the shares, information that he certainly didn't offer up.

Bad Advisor. It should be required that any cost to buy or sell always be disclosed. Honestly I don't know if the industry requires it by my company does.

This advisor has been not managing my 401K for over a year and a half. Is he still getting paid out of fees charged to my account for the funds I'm invested in?

You asked the best question, and this is the one that hurts you. My guess is that most companies do it the same way my company does - when you buy a fund (loaded), the agent is paid upfront, regardless of whether the share class is A, B or C. With B, the fund company pays the agent an upfront fee that they recoop over time from the .75%. The agent may get on 4% while the fund company may get 6% in the end (.75 x 8 yrs). If the agent leaves, you are still paying the fund company for the rest of those 8 years. If you sell in year 3, you have paid 3 years of .75% plus you will pay a back end cost to the fund company to cover those years you won't be paying the .75%. Either way, they are going to get their money.

The only way around such would be to complain to the company that you were never told about the back end cost (CDSC) to sell. Tough fight but in this heavy regulatory environment, they might buckle rather than face serious complaint (note complaints in writing are handled with specific instructions that must be followed).

- The funds I have are not great but not bad. Many times buying a B share makes better financial and performance sense.

Over the past year, the funds have performed as follows (the S&P has gone up 19.26%):

CVGBX - 3.02%
EKWBX - 23.58%
PQUBX - 7.83% (to be fair - this performace is only since Jan and is very close to the S&P over that time)
FRUSX - 26.26%
SRLPX - 17.50%
ACEQX - 9.07%

Figuring in the expense ratios, over the last year that's a return vs. the Vanguard 500 of (-17.5%), (-11.5%), (-3.5%), (-1.5%), (+2.5%), and (+6.0%).

What exactly is 'not bad' about that? And please understand that I'm not being argumentative - this is a sincere question.

First, you are not doing an apples to apples comparison. Why compare a commodity fund to the S&P? If you want to see how those funds have done, compare them to their PEERS (try and not to the S&P.

For example, ACEQX is a moderate allocation fund - it has only 58% in stock. Comparing it to the S&P is not fair in the least. When you compare it to other moderate allocation funds, it has beaten THAT index every year of the last five years. Compare this fund to the Vanguard Balance Index and it beats the Vanguard index for the 1, 3, and 5 yr numbers - and the Vanguard Index has 2% more stock.

Calamos Growth - CVGBX, is up 12% YTD (not sure why you list it as 3%). It is fair to compare this to the S&P as it is a large growth fund (though the S&P might be better listed as a large core fund). It has beaten the S&P EVERY SINGLE YEAR since it was opened in late 2000. This fund is exceptional in the fact that it was one of the few large growth funds that returned to profitability by the end of 2003. Most look until 2005 or later to do that (the fact that it was opened in late 2000 instead of earily 2000 helped a little in the regard but not much). This fund would have stomped the Vanguard 500 during the same time frame. The Vanguard 500 did not become profitable again until late 2006.

I'm looking at 3-5% loads to get out of all of these funds, most of which are grossly underperforming the market.

You can always do an exchange to other funds of the same family at no cost. The only thing that you cannot do is sell them outright.

Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.