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Re: American Funds' Spotless Reputation At Risk !
hurleyhuckster
05-04-2008, 8:03 AM | Post #2514496
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Wrong is wrong, but these teeth aint biting. Its almost laughable. I think they did the client a favor, it helped prevent them from selling the client AIM funds! I mean no one really expects a broker to steer clients toward no-load funds, do they? Yes totally unsuitable investments........ Stable conservative team managment Focused Long Term Approach Outstanding Global Research Some of the lowest load fund fees available Shame on them!
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Re: American Funds' Spotless Reputation At Risk !
Gregory
05-07-2008, 5:01 PM | Post #2515595
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"The first hearings panel, in 2006, decided that American Funds was
merely "negligent" in breaking the rules on sales deals with
brokerages. The national panel said it was worse than that, accusing
the firm of "intentional" conduct.
What's more, the national
panel almost seemed to be looking for victims in the case. It said the
company's practices "potentially injured the customers" of its
brokerage partners by giving the brokerages a reason to favor American
Funds' products over other firms' funds, regardless of whether they
were the right choice for the investors.
American Funds, which
has contended all along that its sales practices did not harm its
investors, declined to discuss the national panel's ruling." No amount of spin makes this look good for AF.
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Re: American Funds' Spotless Reputation At Risk !
hurleyhuckster
05-07-2008, 10:40 PM | Post #2515664
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 Gregory: No amount of spin makes this look good for AF.
Cant argue with you there Gregory. Like I said, wrong is wrong, and this will tarnish them regardless. However, they were just pushing there fund sales. They have good low cost funds and a pretty good lineup, even if they dont cover all the bases. I just cant imagine that this forced people into unsuitable investments. If it did then the advisor or broker behaved unethical. Ofcourse one could say they were influenced by this AF policy. What other funds would an advisor/broker offer that are better than AF? They have no incentive to offer no-load funds unless working under AUM contract and in this case they could use AF "no-load" F-shares. If they broke the rules, then shame on them. I just dont see this as any kind of reason to run for the exits, just another reason for Diehards to tell people to sell their AF's. I welcome comments to show flaws in my thinking. Am I totally off base here? Can someone offer an example of how this could of really hurt an investor? Brian
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Re: American Funds' Spotless Reputation At Risk !
Gregory
05-07-2008, 11:11 PM | Post #2515668
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Brian, what you're stating is that AF funds are the best choice for each and every investor, right? No matter how good a fund company is, that's not going to be the case. Therefore, to add even more bias to the brokerage house (in addition to the AF loads, which are among the very highest in the industry) we see the additional bias brought to light by this investigation (and upheld on appeal). Greg
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Re: American Funds' Spotless Reputation At Risk !
hurleyhuckster
05-08-2008, 12:11 AM | Post #2515673
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Gregory: Brian, what you're stating is that AF funds are the best choice for each and every investor, right? No matter how good a fund company is, that's not going to be the case. Therefore, to add even more bias to the brokerage house (in addition to the AF loads, which are among the very highest in the industry) we see the additional bias brought to light by this investigation (and upheld on appeal). Greg
Greg, I guess it may have sounded like I was stating that, but I sure cant argue with your statement. Ofcourse, that could never be the case for all investors. I guess what I was trying to say is that AF has some of the lowest ER's of loaded funds and good stewardship (well atleast before this artice :o) and some good funds that could serve many investors well, out of the universe of LOADED funds. That is quite a bit different than the statement you tried to attach to my lips :o), However, I certainly welcome you to show me I am still way off base. I only state my opinion and always welcome corrections. I am not sure what you mean about AF having the highest load in the industry. Perhaps I am clueless here, but most of the loaded funds I come accross are pretty much the same 5.5 or 5.75%. I have seen a few lower but not many have I just not looked close enough, can you elaborate? Of these other loaded funds, the ER's always seem to be higher than AF. I have always thought of AF to be one of the best loaded funds, perhaps I am biased since I am personally invested. So please elaborate on AF compared to other loaded funds would you? To the last part of your comments. Yes, it is a bias ontop of a bias. I just dont see it as incredibily evil, but just marketing and pushing there funds. Again, if it breaks the law then they screwed up. As long as one uses a broker or commissioned advisor these biases are going to exist. We are not talking about DIY'ers here. I guess I was trying to suggest that AF could be the lesser of two evils, not saying that they are the best thing for all investors. Thanks Greg Brian
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Re: American Funds' Spotless Reputation At Risk !
Gregory
05-08-2008, 10:33 AM | Post #2515753
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hurleyhuckster: Wrong is wrong, but these teeth aint biting. Its almost laughable. I think they did the client a favor, it helped prevent them from selling the client AIM funds! I mean no one really expects a broker to steer clients toward no-load funds, do they? Yes totally unsuitable investments........ Stable conservative team managment Focused Long Term Approach Outstanding Global Research Some of the lowest load fund fees available Shame on them!
Brian, it's not laughable. I don't think the folks Capital are laughing at all right now. They've added bias atop bias. Imagine if one of your relatives who would have been better served in CD's, a Treasury ladder, etc. went in and got a loaded AF bond fund instead of something that would have been "better" for them. Would you be laughing? AF has some fine funds, but not every fund family is the right fit for every investor. I know you see my point: just because a fine company exists, doesn't mean it's right for every investor's needs. A square peg and a round hole shouldn't be hammered together just because the square peg is being pushed. Greg
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Re: American Funds' Spotless Reputation At Risk !
KCallie
05-08-2008, 10:54 AM | Post #2515766
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Gregory: Brian, it's not laughable. I don't think the folks Capital are laughing at all right now. They've added bias atop bias. Imagine if one of your relatives who would have been better served in CD's, a Treasury ladder, etc. went in and got a loaded AF bond fund instead of something that would have been "better" for them. Would you be laughing? AF has some fine funds, but not every fund family is the right fit for every investor. I know you see my point: just because a fine company exists, doesn't mean it's right for every investor's needs. A square peg and a round hole shouldn't be hammered together just because the square peg is being pushed. Greg
I think there is an inherent conflict of interest when financial advisors are paid by commissions, no matter if it is American Funds or any other investment that they get a commission on. This is why I prefer hourly-rate only advisors. The only way all of this will change, though, is if people become more educated about these matters and move away from the commission brokerages and toward the hourly-rate advisors (or DIY).
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Re: American Funds' Spotless Reputation At Risk !
hurleyhuckster
05-08-2008, 8:45 PM | Post #2515982
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Greg, Yes ofcourse I see your point. We all know the inherent conflict of interest with any commissioned product. It only makes sense that this additional bias makes it worse. Perhaps I was talking a little too much smack! My main point was that for loaded funds IMO, AF are one of the best. Perhaps I am also a little personaly biased here, its not like I have studied all available loaded funds, why the heck would I, I am just not interested in them. I do know American Funds though, and I know they are some of the lowest cost loaded funds around. No? I would still like you to support your comment about them having the highest load in the industry, I think thats what you said, dont have the quote right in front of me. I am not suggesting that there load is not at the typical high level, but you make it sound like many other load funds are way less. Is this so? I have not noticed this. So please do tell, I am curious. I am sorry if my post offended you Greg. Conflicts of interest and unethical advisors really suck, what can I say, thats why we are here doing for ourselves. I was not supporting there behavior, although it may have seemed that way. Brian
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Not that it makes it any easier to stomach for any persons hurt by this practice. However, I have noticed this spelled out in all the prospectus's, not that anyone who would of been hurt would of read them! OFcourse, it is buried in a document that that they know will probably go unnoticed, but it was disclosed! I assume this is the same compensation the lawsuit is about? Other compensation to dealers American Funds Distributors, at its expense, currently provides additional compensation to investment dealers. These payments may be made, at the discretion of American Funds Distributors, to the top 75 dealers (or their affiliates) that have sold shares of the American Funds. The level of payments made to a qualifying firm in any given year will vary and in no case would exceed the sum of (a) .10% of the previous year’s American Funds sales by that dealer and (b) .02% of American Funds assets attributable to that dealer. For calendar year 2007, aggregate payments made by American Funds Distributors to dealers were less than .02% of the assets of the American Funds. Aggregate payments may also change from year to year. A number of factors will be considered in determining payments, including the qualifying dealer’s sales, assets and redemption rates, and the quality of the dealer’s relationship with American Funds Distributors. American Funds Distributors makes these payments to help defray the costs incurred by qualifying dealers in connection with efforts to educate financial advisers about the American Funds so that they can make recommendations and provide services that are suitable and meet shareholder needs. American Funds Distributors will, on an annual basis, determine the advisability of continuing these payments. American Funds Distributors may also pay expenses associated with meetings conducted by dealers outside the top 75 firms to facilitate educating financial advisers and shareholders about the American Funds. If investment advisers, distributors or affiliates of mutual funds pay additional compensation or other incentives in differing amounts, dealer firms and their advisers may have financial incentives for recommending a particular mutual fund over other mutual funds. You should consult with your financial adviser and review carefully any disclosure by your financial adviser’s firm as to compensation received. year 2007, aggregate payments made by American Funds Distributors to dealers were less than .02% of the assets of the American Funds. Aggregate payments may also change from year to year. A number of factors will be considered in determining payments, including the qualifying dealer’s sales, assets and redemption rates, and the quality of the dealer’s relationship with American Funds Distributors. American Funds Distributors makes these payments to help defray the costs incurred by qualifying dealers in connection with efforts to educate financial advisers about the American Funds so that they can make recommendations and provide services that are suitable and meet shareholder needs. American Funds Distributors will, on an annual basis, determine the advisability of continuing these payments. American Funds Distributors may also pay expenses associated with meetings conducted by dealers outside the top 75 firms to facilitate educating financial advisers and shareholders about the American Funds. If investment advisers, distributors or affiliates of mutual funds pay additional compensation or other incentives in differing amounts, dealer firms and their advisers may have financial incentives for recommending a particular mutual fund over other mutual funds. You should consult with your financial adviser and review carefully any disclosure by your financial adviser’s firm as to compensation received. that dealer and (b) .02% of American Funds assets attributable to that dealer. For calendar year 2007, aggregate payments made by American Funds Distributors to dealers were less than .02% of the assets of the American Funds. Aggregate payments may also change from year to year. A number of factors will be considered in determining payments, including the qualifying dealer’s sales, assets and redemption rates, and the quality of the dealer’s relationship with American Funds Distributors. American Funds Distributors makes these payments to help defray the costs incurred by qualifying dealers in connection with efforts to educate financial advisers about the American Funds so that they can make recommendations and provide services that are suitable and meet shareholder needs. American Funds Distributors will, on an annual basis, determine the advisability of continuing these payments. American Funds Distributors may also pay expenses associated with meetings conducted by dealers outside the top 75 firms to facilitate educating financial advisers and shareholders about the American Funds. If investment advisers, distributors or affiliates of mutual funds pay additional compensation or other incentives in differing amounts, dealer firms and their advisers may have financial incentives for recommending a particular mutual fund over other mutual funds. You should consult with your financial adviser and review carefully any disclosure by your financial adviser’s firm as to compensation received. year 2007, aggregate payments made by American Funds Distributors to dealers were less than .02% of the assets of the American Funds. Aggregate payments may also change from year to year. A number of factors will be considered in determining payments, including the qualifying dealer’s sales, assets and redemption rates, and the quality of the dealer’s relationship with American Funds Distributors. American Funds Distributors makes these payments to help defray the costs incurred by qualifying dealers in connection with efforts to educate financial advisers about the American Funds so that they can make recommendations and provide services that are suitable and meet shareholder needs. American Funds Distributors will, on an annual basis, determine the advisability of continuing these payments. American Funds Distributors may also pay expenses associated with meetings conducted by dealers outside the top 75 firms to facilitate educating financial advisers and shareholders about the American Funds. If investment advisers, distributors or affiliates of mutual funds pay additional compensation or other incentives in differing amounts, dealer firms and their advisers may have financial incentives for recommending a particular mutual fund over other mutual funds. You should consult with your financial adviser and review carefully any disclosure by your financial adviser’s firm as to compensation received.
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Re: No evil secret!
hurleyhuckster
05-11-2008, 6:41 AM | Post #2516653
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Yikes, M* formatting sucks sometimes. I tried to edit the duplication in print above that M* put in (not me) and it is not working. Oh well, not like anyone will read it anyway :o)
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