For the most part, there is a reason as to why a Bank or Brokerage firm puts a mutual fund in your account – FEES. Whether it’s through being paid directly by offering up a propriety product or through revenue sharing by allowing another fund family to participate on their platform, Brokerage firms have found a way to legally double dip on your account. The adviser makes his commission or asset management fee for managing the account, and then the institution makes its fee from the mutual fund.  This is a very lucrative, but far from objective practice endeavored upon by most large brokerage firms. Most clients have no idea what is going on. This is because the conflict of interest is only revealed to them in tiny print on the back page of a prospectus, which is rarely read. If the firm does have proprietary funds, many hide the affiliation by naming the fund family something that is hard to trace back to the parent company.

In my opinion, it is for reasons like this that the only way to truly give objective and conflict free advice is as an RIA:

  • No Hidden Agendas
  • No Hidden Fees
  • Complete Transparency

To end blog, I thought I’d reveal some of the more popular Brokerage firms that have a direct affiliation with a mutual fund company, but hide the direct relationship through the name:

  • Ameriprise Financial – Columbia
  • BB&T – Sterling Captial
  • New York Life – Mainstay Investments
  • Northwestern Mutual – Russell Investments
  • Mass Mutual – Oppenheimer Funds

*source for picture: (flickr: http://goo.gl/71kcn0).