Teddy has been quoted as having said "We have to save capitalism from the capitalists." In case you are wondering what the Old Rough Rider had in mind, here's a(nother) quote from Ox:
"This market is punishing quite well the companies that have inflated or committed fraud. There are plenty of laws on the books now to take care of the individuals."
The reality is that the market is punishing quite well those STOCKHOLDERS of those companies that have inflated and committed fraud. Last I looked, the bastard CEOs were still living high off the hog. Oh, and let us not forget who else is being punished - THE WORKERS OF THOSE COMPANIES. It is time to get your head out of your ass, Ox. And one last thing to ponder - if the CEOs are all in jail, the stockholders are hurting deeply in the wallet, and the workers are out of work - just who the hell is going to buy what it is you are selling?
Sure, the market is going to come back. The American economy is basically strong. But in the meantime a lot of middle class working slobs are hurting like hell, the education of families is being jeopoardized, and life is just a little harder. Maybe those are the members of the "underclass" your news report referred to, you effete, pompous and cavalier son of a bitch.
Fees in a "wrap" account depend on the amount of money, using break points like mutual funds. Typical, though, for $250,000 might be 1.25% annual fee on the account...of which a rep might get 50-60 basis points. So total cost to the client might be $3,125 per year (increasing or decreasing as the account value changes), and the rep might get paid $1,250-$1,500/yr.
Contrast that payout with the appx. $5,000 up front commission available to a rep using a conventional fund, and you see a difficult business decision: How much to give up now, for an ongoing flow of increasing revenue? And how long can this golden goose continue laying before people say they don't want transactions, but want ongoing fee relationships? I think the biggest issue is really the transition from commission to fees. Doing that without going broke is the trick.
As for how many such advisors Met has now...not many. If all the Met folks were like this, I don't think there'd be much contest for the King-of-the-financial-world title. But no institution has many of them...yet. The race is on.
I guess I just thought you all might be interested in what's going on in the Individual Business (sales) department of the company. Perhaps this begins to explain why I'm so optimistic about Met's potential future.
Just a note , Jim Benson was the president of New England Life Insurance Company, not Kernan King. Now , New England Life is New England Financial , part of IB/NEW U.S. DIVISION. I hope this helps...
Thank you, kashi.
I looked him up and he apparently still lives in Boston with his wife. Kind of an interesting choice for Oxy to mention, no? I wonder if that is a suggestion that Bobbo swings both ways?
Ox, that's an interesting model that you put forward. When you say "fee," what kind of numbers are you talking about (either percentage or dollar amounts will do). And I recognize that this may vary considerably, but I'm trying to get a sense of what you are describing (the problem is NOT with your description, it's with my understanding.)
Also, how many such advisors does Met have, as opposed to sales reps?
Let's talk about a qualified Financial Planner. The advisor should recommend the funds, not the client. Obviously, the client gets to make the final decision (it's their money), but the physician recommends a course of treatment, the CPA recommends whether to deduct the expense or not, the auto mechanic recommends whether to replace the gizmo or wait...the advisor gives the advice (that IS why they call them advisors...).
When you sign on with a qualified planner and think their advice sucks and move out of the funds and to another advisor, you should pay no back end loads nor have paid any front end loads. That's the whole point of an advisory account. You can fire the advisor and the revenue stream to them stops, so they don't want you to fire them...unlike a salesman who got paid their commission and suffers very little if you close your account after that. However, whether you pay a load (front or back) to the next advisor depends on how they work. In any event, both advisors should provide you with full disclosure on how they work before you hire them so you know what you're getting into.
The fee is paid to the advisory company (MetLife Securities, Inc., Merrill Lynch, Paine Webber, etc.) but a portion of the fee goes directly to the advisor. A qualified advisor would meet with you every three months either in person or by phone to discuss your accounts and (more importantly) the impact of financial developments on your ability to reach your goals and enjoy your life. Someone who lost 30% of their account value, but has not seen any effect on their ability to educate their children or retire on time is much less concerned than someone who lost 10% and doesn't know what impact that lost money has on their life. This is now beginning to get into the difference between comprehensive financial planning and investment management...two very different disciplines.
The fee is usually deducted from the account quarterly in advance. If, indeed the advisor is doing nothing after the initial consultation, I would expect a reasonable client to first raise their concerns with the advisor, and then if you can't be satisfied, fire them and move to someone you are happy with. But be aware...you are not the only one deciding whether to work with this advisor. The advisor should have standards having nothing to do with money about who they take on as a client. These would include, can you get enough value from the advisor to justify the fees, are you going to be reasonable in your expectations of the advisor ("I just want to make 25% a year til retirement, like my friends"!), will you implement all the recommendations or will you instead pick and choose which things you do and then blame the advisor if things go bad. Also please understand that to enjoy these benefits the client must be willing to pay a fee. If the client wants to pay nothing to compensate an advisor for advice, they don't want an advisor, they want a salesman. In that case, they can't really complain that they paid a front/back load. If you prefer to cut the salesperson out of the process entirely, no load funds are available.
I really think the problem with financial services lies more in the lack of disclosure and the lack of understanding on the part of the client of the options available. What do they get for an advisor, vs. salesman, vs. no load? They're all valid for someone and they're all inappropriate for someone. The question should be what's right for the individual.
What do you think?
Hey you responded to the wrong poster, but then again I had a Met rep who at our second meeting addressed me by the wrong first name, a name he had right in front of him. I then told him thanks for his disinterest, addressing him by the wrong first name, and he didn't make a sale and I didn't meet life that day.
(The following is not directed at you personally since we don't know each other.)
So, when you have a new client, do you recommend a fund or funds? Does the clinet choose the investment vehicle? If I sign on with you and I think your advice sucks, what charges do I incur if I choose to get out of the funds I invested in under your guidance and move to a new family of funds and a new rep with another firm?
Who gets the fee you mentioned? Why is the fee paid to you if you're doing nothing after the initial consultation?
Again, I don't want to personalize this so substitute agent/cfp for every reference to "you".
Thanks & lol,
No, sorry, I don't believe you, nor do I believe you when you left the board as BigBang and returned and twilight.
But that's OK, do and post whatever you want cause you'll get no attention from me.