(07-31-2019, 01:37 PM)The Real Marty Wrote:

(07-31-2019, 12:46 PM)Predator Wrote: Because the DOL fiduciary rule required a client sign a form that would allow commissions to be charged. Why can't you understand that concept?

I can't believe I am arguing financial management with a guy who talks about "impersonal" mutual funds and then his explanation only shows that he doesn't even actually understand what a mutual fund is.

I think he's asking about commissions that investment advisors receive from third parties and do not disclose to their clients.  

I see it everywhere.  For example, Merrill Lynch advised someone I know to buy General Motors bonds.  I read the prospectus for those bonds, and Merrill Lynch was underwriting those bonds, and they had an agreement with GM that they would market the bonds.  But they didn't disclose that fact to the client.  I really like Merrill Lynch and the services they provide their clients, although I do not use them myself.  I am educated enough to be self-directed.  But shouldn't they be required to disclose that they are being paid to push those bonds?  

The company I worked for had a 401k plan, and we had an independent advisor helping us run the plan.  He did not disclose that the plan he advised us to use was paying him commissions to push their plan, until I asked him directly whether this was the case.  He was under no requirement to tell us.  

Another thing I really hate about investment advisors is when they charge a percentage, like 1%.  That is a total ripoff.  Over a long period of time, that investment adviser will be taking about a fifth of your returns.  I know a person who has an investment adviser who charges that 1%, and in his case, that means he's paying this guy many tens of thousands of dollars a year to handle his money.  Managing money is not so hard that it's worth $100,000 PER YEAR for someone to manage it.  It's a ripoff.  

There are a lot of good investment advisers out there, but there are also a lot of parasites, and they prey on the ignorant.

Firms are required to disclose that information. Either the person you know didn't remember getting it, or the advisor made a mistake. All trades are reviewed by supervision and if proper disclosures aren't documented by the advisor, they will break the trade and the advisor will be required to contact the client to give proper disclosure, and if breaking the trade puts the client at a loss, then the firm will be legally required to eat that loss. It's possible the advisor went back and added the disclosure to his notes to cover his [BLEEP].

I'm not sure what disclosures a 401(k) plan administrator is supposed to disclose, but if you thought violating regulations, then you should of reported him to FINRA. If he violated regulations, he could be fined and possibly stripped of his license and be unable to work in the industry again.

Some people think that a highly skilled professional should work for them for free. If 1% is too high for them, then they can chose self direct and make their own investment or change advisors, but an unskilled investor won't know how to properly diversify or allocate his portfolio. If trying to manage it themselves decreases the returns by half, that 1% suddenly becomes well worth the price. Investing may not seem hard to you, but to most people (like our engineering friend that doesn't understand what a mutual fund is) it's Greek.

Car salesmen can make 6 figures. Real estate agents can make 6 figures. Financial advising is a professional job that requires far more education and training in specialized skills than either of those positions, yet they aren't supposed to be able to earn 6 figures when they are helping their book of clients earn far more than the advisor makes?

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