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Wealth Professional | 03 May 2015, 08:54 PM Agree 0
Where’s the beef? It’s the question advisors critical of DSC funds are asking colleagues who use them, suggesting, too few are doing the heavy lifting needed to rationalize the fees.
  • Tony De Thomasis | 04 May 2015, 10:34 AM Agree 0
    re DSC fees
    On larger accounts there should be no reason for DSC fees as fees are big enough either flat fee minimum or based on size of assets.
    Most fee advisers have a minimum either in dollar size or dollars charged.
    But...who will want to service the $10,000 to $20,000 client?
    How much work will a a top adviser spend when the most they will make is say $150 at 1.% to 1.5% fee?
    Or if on a flat fee how much can they really charge that investor?
    This investor needs a top person to work with to do it right the first time.
    Lost time can never be taken back.
    Once they have large assets built up, everyone will be after them and want them as clients.
    But at that level they may only get a junior with very little actual hands on experience.
    So that 30 year of good compounding we all talk about in the industry may now only be 15 years.
  • Shawn Flannigan | 04 May 2015, 11:09 AM Agree 0
    There is nothing wrong with DSC fees and I have found that in some cases where there is an upfront fee or on going service fees clients are not getting continued advice and service. I follow a strict guideline with clients in order to make sure that there is a financial plan and clients continue to be in the correct risk portfolio based on their needs. I think the main problem with DSC fees is that some advisors neglect in telling their clients about the fee structure and when the clients find out they are upset. My clients are fully aware of the fees since the fees are they outlined in their plan and I have them sign a document that they understand the fees. I also feel that every advisor must have their clients sign the appropriate documents outlining all fees associated with their financial plan and funds in the plan. DSC fees are set and since this is how advisors get paid then there is no reason to charge clients additional yearly fees on their portfolios. There are many clients that set up their investments and do not make many changes over time so why in these types of cases are additional yearly fees warranted? Another main point is that I have many clients that have less than 100k in their portfolios and they cannot afford to pay an upfront service fee and yearly fees and they do not want too. However these clients understand the amount of work and time to look after their accounts so to them a DSC fee is the answer.
  • Will Ashworth | 04 May 2015, 04:29 PM Agree 0
    I've read several comments from readers on this subject that mentions some clients don't have the money for upfront fees.

    Advisors such as Ross Birney charge 0% front-end loads.

    It follows that if a client's paying an upfront fee for mutual funds, they're being charged more than 0% front-end which doesn't seem like a good idea, either.
  • Tony Romano | 05 May 2015, 11:01 AM Agree 0
    I think that the DSC funds are appropriate for many clients, especially clients that would like a financial plan put in place but don't want to pay the upfront fee for the plan. In addition, the trailer on DSC is very low for the follow up service on an ongoing basis. People should ask for a different advisor IN the company they're working with instead of jumping around different firms. Most firms offer exactly the same products. If they find a good advisor, they should give him more than just two years to prove his worth.

    Besides, banks are even taking fees on GIC transfers even after the GIC has matured!!! This isn't being talked about nearly as much as this DSC discussion.
  • Will Ashworth | 05 May 2015, 11:29 AM Agree 0
    Tony, good point about the GIC transfers and the banks. We definitely should do more on the bad habits that exist in the industry.
  • Brian Shumak | 09 May 2015, 03:45 PM Agree 0
    I find it perplexing that there is even a debate here. Is it not the prospective client's option as to what s/he will enroll in. As long as both options are proposed, then the client is informed and away we go.

    If the regulators want to make sure that the consumer is properly protected, then there should be a standard document that shows the options to the client and the document must be signed at each new purchase of funds.

    Moreover, is it not a common practice of mutual fund advisors to rebate the fees when they continue to manage the funds?

    What I find far more disturbing is the profession of a financial plan being done and there is little to address all of the areas of planning and rather there is a focus on the sale of whatever the salesperson not advisor is compensated in.
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