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Further
Reading ...
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Imitation, The Smartest Form Of Flattery - David Geer
Unless you are an inventor, most likely you are selling a product or service that is being offered by someone else, somewhere, at some time. The first person to start your type of business would have gone through a lot of trial and error. Thank...
Why Others Can't Start a Business - Roger Younce
How many times have you heard someone say I want to work for myself or I want to be self-employed and be free from working for others? If you are like me and own your own business you hear that a lot. Now let us be honest. How many times do you...
Motivating Employees - Richard Lowe
I've been to many, many seminars on management and supervision. I've read hundreds of books and talked with more people than I care to admit. For many years, I searched for the answer to the question: "What motivates employees?" All of these...
Currencies, Taxes and Citizenship - William Cate
Currencies, Taxes and Citizenship By William Cate July 2004 [http://home.earthlink.net/~beowulfinvestments/] [http://home.earthlink.net/~beowulfinvestments/globalvillageinvestmentclubwelcome/] Would you accept 1,185,000,000 Tugriks for your...
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How to pay less and get more: Discount broker vs professional
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Written By:
Ulli G. Niemann
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How do you invest? What do you really pay? At the end of the day, what are your real results? These are questions smart investors should be asking themselves (but usually don't). In this era of more fees, misc. charges, holding periods and back end redemptions, even at discount brokers, how are you really making out?
Working with a new client brought this all to my attention. I know what I found may not apply to everyone; however it will apply to many and very likely apply to you.
I need to preface this by saying that, unlike the majority of registered investment advisors, I have built my practice over the past 15 years by dealing with “small” investors. Many of them are first timers because my minimum account size is only $5,000.
I targeted this group because I enjoy the educational part of my business. A happy side benefit has been that by providing million dollar service to these so called “small” investors, they naturally refer me to parents, relatives, friends and business associates, often with considerably more assets than the original client. What a happy consequence.
Having set the stage, here's what happened with my new client who we will call John. John was 26, newly married with a one year old son. His wife was taking care of the child and John had a good full time job. After selling his house in California and moving to Florida he had $6,000 left for starting a long-term investment program.
Though he had been reading my newsletter for about a year, John decided to manage his 401k on his own. It was a noble effort but provided less than desirable results.
He then attempted to set up a brokerage account at a major discount broker. With his $6,000 he was told that the quarterly fee would be $45, and, of course, if he sold any mutual fund within the first 180 days, there would be an early redemption fee.
$45 per quarter would be equal to an annual fee of 3% of his starting balance. John called me somewhat frustrated and said that he'd be willing to set up - continued below ...
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continued ...
an account with me, but how would it make sense if in addition he'd have to pay my advisory management fee?
That was a good question because it certainly doesn't make sense to have an account in any type of market environment and pay about 6% in fixed annual fees.
However, what John didn't know was that if you have an account with a registered investment advisor who is affiliated with custodial broker, the fee structure changes.
What did that mean to him? It meant that I opened the account for him as a new client. He now has no annual fees, other than my management fee, and his 180 day holding period for mutual funds is reduced to 90 days, minimizing, if not eliminating, the likelihood of an early redemption fee.
The net result was that he would receive the benefit of my experience-which he already trusted based on my track record of pulling clients out of the market in October 2000-and it would cost him no more, and likely less, than his discount brokerage account.
Needless to say, John was very relieved. In essence, he traded broker garbage fees for professional management at no additional cost to him.
And, since he itemizes his deductions on his tax return, all fees paid are tax deductible, which is just an added bonus to factor into the equation.
It turned out to be an all around win-win situation for John. I encourage you to review your situation and see if what looks like a discount in fees is actually costing you a premium.
Ulli Niemann is an investment advisor and has been writing about objective, methodical approaches to investing for over 10 years. He eluded the bear market of 2000 and has helped hundreds of people make better investment decisions. To find out more about his approach and his FREE Newsletter, please visit: http://www.successful-investment.com
ulli@successful-investment.com
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| _Additional Resources ... |
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What has YOUR biz op done for you - Dr Jeffrey Lant
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Coffee4Me - Guy Gray
Buzz! Buzz! Wake up lovely day ahead. Oh "yea". If that is your morning Blahs you should check out the coffee in my cup. "Great Day In The Morning" and "Top of the Morn to ya" would be the response, instead of yea leave me alone let me sleep. For...
Why Can't You be More Like Me? - Sandra Schrift
Here is a non-scientific, but fun way to see which style you may be. Read the poem below and then identify which one of the styles is most like you. You will also start to see and understand the behavioral style of other people around you just...
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