Comments on: Commissions Being Banned For Financial Advisors

By: Anonymous

Anonymous — Tue, 29 Sep 2009 09:05:45 +0000

Hiding fees and charges should be a crime. Then people will understand the real price of “free” advice (usually multiple times a fee-only planner’s rate).

If people can’t count on the government to stand behind social security, or companies to stand behind their pensions, the least they should get is proper regulatory oversight of the financial industry. Commissions need to be banned.

By: Anonymous

Anonymous — Tue, 29 Sep 2009 09:00:44 +0000

Anyone paid commissions or referral fees = salesperson. It’s not hard to differentiate

By: Thicken My Wallet » Blog Archive » Will more mutual fund regulation doom the ETF market?

Thu, 24 Sep 2009 08:57:05 +0000

[...] As reported by Preet previously, regulators in various jurisdictions are proposing to eliminate mutual fund companies from paying commission to investment advisors to secure sales or to accept [...]

By: Investment Advisor

Investment Advisor — Fri, 11 Sep 2009 11:06:26 +0000

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By: Preet

Preet — Fri, 21 Aug 2009 16:39:44 +0000

@Thicken My Wallet – I don’t know what model would “work” best. Theory and practice are of course two different things most of the time. I agree that if we have a great recovery we will see more lobbying against the change, but for now no one is willing to voice their disagreement too much as they don’t really have a leg to stand on.

I could see a flat rate, or hourly accounting for financial planning. I could see a separate model for investment execution and monitoring. Right now its too bundled (on the whole).

By: Thicken My Wallet

Thicken My Wallet — Fri, 21 Aug 2009 13:40:52 +0000

Preet- here is my question- do you think advisors should move to a billable hour model and if they buy products on behalf of clients, they charge them as disbursements with no mark-ups?

The issue with that model is that it flies in the face of the “everything is free” ethos of our society so push back would be great.

The UK proposals are also in consultation stage. It will be interesting to see how watered down they are when approved. If the economy starts to turn and the consultation process drags on into a job recovery, I am not sure they will push as hard.

Have a good weekend.

By: The RR Top 5 (or 7?) | Realizing Retirement

The RR Top 5 (or 7?) | Realizing Retirement — Fri, 21 Aug 2009 12:03:20 +0000

[...] at Where Does All My Money Go? talks about Commissions Being Banned For Financial Advisors (no, not in Canada [...]

By: Ink-stained gorilla

Ink-stained gorilla — Thu, 20 Aug 2009 19:06:18 +0000

The only thing to keep in mind with advisor compensation – in addition to what has been mentioned – is that advisors can offer valuable advice beyond mutual funds in tax, estate and insurance planning.

Also, most of your portfolio’s performance may indeed come from strong asset allocation as opposed to the performance of the indvidual underlying funds.

Insurance and investment products are how many get paid. The difficulty is differentiating good planners from sales people.

If you can’t monitor all of this yourself – you might find paying an advisor worth your while. Trailer is one way to do this. It’s impressive what a well designed financial plan can do. Emphasis being on “good”.

By: Gerry

Gerry — Thu, 20 Aug 2009 17:32:31 +0000

Removing the trailers is a great idea. The last three financial planners I’ve interviewed all proposed portfolios made up of mutual funds that significantly lagged their indexes, had very high expense ratios, and paid a fat trailer to them. Without exception, when I’ve suggested just buying simpler index funds/ETFs they have come out against them. In one case, when I pointed out a different version of a mutual fund paying a lower management fee (and smaller trailer), they objected. Needless to say, none of them are getting a cut of my money.

By: Henry

Henry — Thu, 20 Aug 2009 15:33:06 +0000

It is the norm for Registered Investment Advisors in the US to compensated on a fee basis not on commissions. In a way, RIA system in the US is one step ahead of everyone else and is the fiduciary model that other countries or systems will follow. Like John Bogle, I believe strongly in a fiduciary system.