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We currently have some money in some Fidelity funds which I like. I notice that they have F Series Funds that are No Load with a MER that is much lower (1+% vs. 2+%). They don't appear available to purchase directly from my direct broker.

Any way to convert my current, higher fee B Series funds over to F Series funds reasonably?
 

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Dan Hallett wrote an article a while ago (I thought) comparing retail-class and F-class mutual funds for "smaller" investors and concluded that F-class investors aren't necessarily any better off - because they are typically paying for advice which equals (and sometimes surpasses) the MF fees on retail funds (however, I can't find the article in a few minutes of searching.)

In the meantime, here are some background articles on F-class mutual funds:

- an older one on the introduction of the F-class series

- a recent article by John deGoey, an advocate for more transparency in the domain of advisor fees...
 

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as described, these eff-type low MER series are available only for resale by investment counsel or investment managers who are already charging a client - usually a high-net-worth client - fees based on total assets under management. Such a fee is typically 1.5%. For multi millions it drops to 1%. So the client winds up paying the usual 2.5% or higher, as an ongoing combined management fee, that he would have paid if he had bought the no-load version of the fund at a discount broker.

the investment counsel who sells him the eff-type fund benefits by procuring outside portfolio management at zero cost to himself, either in $$$ or in his time, even though he's capable of managing the portfolio himself. But why should he waste his resources, when he can get the client to pay extra for it and thus free up his time for additional sales & marketing.

i'd also bet that inv counsel is paid trailer fees by fundco, in addition to the fees for money under management that he's charging his high-net-worth client. In fact i'd probably bet the farm.

sigh.
 

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I can't speak for all other investment counsel firms or fee-only planning firms but I will tell you (and keep in mind I am NOT anonymous on this forum; I am putting my actual name and rep behind these words) when I was a fee-only advisor the ONLY thing we charged our clients was our fees and the ONLY form of compensation we received was fees from clients. We paid ALL custodial and transaction fees ourselves (with the exception of annual account fees of $135 that were usually charged through to the client). For fee-only clients, we received not ONE penny of "trailer" compensation from any MF or ETF company.

Still want to make that bet? ;)
 

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great to hear that.
thanks MG.
i know one (inv counsel) that would do the same. Highly ethical.

a problem with all the large inv counsel houses, i think, is that the pressure on the CFAs to build bigger books & increase sales is intense. At the end of the day, increased AUM is all that their bosses are going to recognize & value. These are the stories that i hear.

ps from the client's point of view i'd like to mention that 2.5% of one million is $25 thousand per annum
or more than $2,000 per month
for the client to mostly be told that he needs to hold 40-70% bonds and 60-30% blue chip stock; and these are the funds that'll do the job.
 
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