Interesting discussion. The other fly in the ointment of the "commission is cheaper" arguement is that I have seen too many portfolios lately that were invested through a commissioned salesperson 3-4 years ago and never serviced, i.e., these folks lost quite a bit a wealth as the commissioned salesperson never allocated properly in the first place and then never amended allcoations when it was clear a bear market was ensuing.
So really, in an emprical way, fee based portfolio advice is not "cheaper" at all in that scenario.
I fully agree that paying someone 2-3% upfront for the opportunity of access and education is money well spent. C share plans bother me for the youngest investors though, as the fees might be rather excessive over time, epecially if no further allocative advice is given and under the conditions of a flat market where nominal equity returns are less than 10%.
I mean you guys want to talk about giving salespeople the wrong kind of incentive, look at the life insurance world! Old compliance axiom, you dangle a big enough carrot ( commission ) and you'll make even an honest person give biased advice.
In terms of fees, seems that B shares with disappearing 12b1's are a very good commissioned option for broker sold products.
Mikesaver, there are plenty of low or no cost opoortunities for do-it-yourselfers out there. And I am sure there are commissioned salespeople that dont add any value for their "vig" either. However, its clear that you have never dealt with an advisor who truly has his/her clients best interest at heart and brings a proper knowledge base to bear on planning issues. There are some truly excellent advisors out there worth every penny they charge. And in my view, most are fee based.
Is there any wonder why no load fund shops are converting to commissioned based funds to access the professional distribution channels?
And yes, in the interest of fair disclosure, I am a registered principal with RJFS.
Gene Chaas, CFA
[
[This message has been edited by bigblock (edited October 22, 2002).]