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Wealth Professional | 21 May 2015, 09:23 AM Agree 0
Be careful what you wish for -- any prohibition on DSCs would certainly include a ban on two more-likeable product choices.
  • Ken kivenko | 21 May 2015, 05:18 PM Agree 0
    What the heck is an" embedded commission" advisor? I'm sure that is not the title on the business card.DSC funds have cost investors millions of dollars in early redemption penalties thus impacting their retirement savings. Research shows that very few fund investors hold funds more than 6 years; in fact there are less than 40% of funds with 10 year records due to mergers and closing session. Advisors should focus on the best interests of clients- the rewards will follow without this distraction. I do not disagree that salespersons could sell DSC funds but they could not call themselves professional advisors.
  • Mike Travers, CFP | 22 May 2015, 10:26 AM Agree 0
    Ken, I'm sure a large portion of the early redemption penalties you're referring to is more a result of the DSC load not being applied properly, where the time horizon isn't clearly understood or worse, the advisor doesn't care.

    DSC has a place but it should not define the professionalism of an advisor. It's simple:

    1. Analyze the time horizon to understand the proper load to recommend
    2. Explain all the details of the load recommended (including what the client could face in cost if the time horizon is changed)
    3. Let the client decide

    Point three is massive and anyone declaring DSC to be wrong, not in the client’s best interest, criminal, or should be totally banned is just oblivious to how any marketplace should work.

    Guys/gals, this is just one part of the overall interaction with the client and is a normal function of business dealings; there are costs to operate a business and the consumer must pay for what they get. If the terms aren't agreed upon, either party can move on.

    Do accountants and lawyers, those who are commonly referred to as professionals, not get paid for their time? It’s the work they do that is the measure of their professionalism, not their remuneration. The DSC load is just another, albeit more hidden, way of paying for service. Explain it FULLY and let the client decide if it’s fair, just as they would with their accountant or lawyer.

    Thanks for heating up this topic Will. I’m wondering though, could you maybe have us focus on really important topics, like why the heck is this band of nitwits that has power in the Ontario provincial government forcing the Ontario Pension Plan on the economy?? Clients would be better off in us uniting on this topic rather than debating how we choose to get paid or who is more professional. I don’t mean to ignore the rest of the country, just one suggestion.
  • Robert Roby | 23 May 2015, 09:43 AM Agree 0
    ETF,s serve as an important addition in a well structured portfolio. Given that the market reverts to its mean average combined with a high percentage of mutual funds that fail to meet market benchmarks it only makes sense to add not only index ETFS but sector specific ETFS in addition to dividend aristocrats to the mix. Most funds are so large that many mangers who claim active management are handcuffed by the inability to unload holdings in a timely manner.
  • BobT | 01 Jun 2015, 12:02 PM Agree 0
    As far as DSC being the reason that many investors avoided selling out in 2008/09 I disagree. The only thing that really allowed people to stay in the market was behavioural counselling which we should all employ in our practices.

    I had one small client leave in 2008 and it was a relief. He was unwilling to listen and made all his decisions based upon fear.
  • Ravi Syal | 03 Jun 2015, 11:05 AM Agree 0
    DSC was never a problem in my 35 yr's career I always disclosed it and 90% of the clients supported me that they understand that I have to get paid,also sold lot of mutual funds with 8.5 % front end fee in early 80s till it became 5%. I think all depends how we disclose to the clients.
  • Nina | 25 Jun 2015, 02:03 PM Agree 0
    Clients should have a choice and a good advisor will disclose fees and how they work. If you use a DSC structure then explain how it works and when the mature date is up DO NOT turn around and put them into another DSC be honest and go FE NC. if the fund needs to be moved many of the fund companies have a great selection keep it with the same family. The problem lies with advisors double dipping and triple dipping in the DSC funds. I agree that is NOT something any one should be doing. With Fee base I have clients that DO NOT want this so what are they to do. They do not want to see the FA getting paid every month when markets lets say are bad and the portfolio is down, they know we get paid from the fund company as I explain this to my clients,. They would rather have them pay us then it show on their statements. They say that it is a visual thing for them we are making money and they are not when markets are off.
  • Robert Roby | 25 Jun 2015, 02:53 PM Agree 0
    Mr. Bogle comments on ETF,s are in my opinion incorrect and misleading. In a well designed portfolio ETF,s play an important role at a low cost. Perhaps Mr. Bogle should be aware that over 90 percent of mutual fund mangers are closet managers thus unworthy of their fees. furthermore so called active management is a questionable term given that large mutual funds can take months to unload a large position. Fidelity/RIM was a great example of how a manager had to wait 9 months to fully unload Rim. Since the market reverts to its mean average then efts can play an important role as part of a portfolio for gains and lower fees.

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