Whose Side is Your Advisor On?

June 29, 2015

Registered investment advisers like to promote themselves as being on the side of investors, but a growing number are quietly accepting money from custodians in exchange for recommending certain mutual funds — usually funds that are more expensive for investors. The payment is made to advisers as a “shareholder services fee.”

 

Under terms of such an arrangement, Charles Schwab & Co. Inc. and Fidelity Investments, the nation's No. 1 and No. 3 custodians for advisers, respectively, pay advisers up to 0.2% of assets held in certain no-transaction-fee mutual funds.

 

“We think this is one of the most egregious [conflicts of interest] we've seen in recent years, and it seems to be more widely practiced,” said Tom Nally, head of TD Ameritrade Institutional, the No. 2 custodian for advisers, which does not pay such fees. “It's a problem. It adds an element of bias that most investors probably don't know about.”  (Mason Braswell, 06.26.15 Investment News)

 

Windsor Capital Management does not accept fees like this.  We have always been independent, unbiased, and conflict-free.  Our guidance and advice is provided with no asterisks and hard-to-read footnotes.

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