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Another Reason REI Beats Paper Assets
| Guest post by: C.J Lauria |
Article Overview: In this article I want to discuss something called the “Preferred List”. This is a list of the funds that a brokerage recommends to their clients. It is the selection of funds that their research has determined are the absolute best in the industry for the firm’s clients. Sadly, in a lot of cases this list is made up of fund families that paid some sort of extra consideration to be on the list. It’s also interesting how often the firm’s proprietary funds end up on that list. Hence, if you are a client of Merrill Lynch, let’s say, you will typically see quite a few Merrill Lynch funds on that list. This is a simple case of allowing how much you get paid to drive your decisions on what funds to recommend.
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Another Reason REI Beats Paper Assets
As you probably already know, I am a leading REI (real estate
investing) Mentor….so I am biased. However, what I am going to share
with you today may convince you why I am. When we talk about paper
assets I am referring to stocks, bonds, mutual funds, etc. They are
different from real estate investment as (for one thing) the Investor
has no control of that asset. These assets must be traded through
Stockbrokers who, are not always in a position to put your interests
above their own. The grim reality is that the entire brokerage industry
is in a panic with conflicts of interests.
In this article I want to discuss something called the “Preferred
List”. This is a list of the funds that a brokerage recommends to their
clients. It is the selection of funds that their research has
determined are the absolute best in the industry for the firm’s clients.
Sadly, in a lot of cases this list is made up of fund families that
paid some sort of extra consideration to be on the list. It’s also
interesting how often the firm’s proprietary funds end up on that list.
Hence, if you are a client of Merrill Lynch, let’s say, you will
typically see quite a few Merrill Lynch funds on that list. This is a
simple case of allowing how much you get paid to drive your decisions on
what funds to recommend.
Another issue that arises in that industry is that many savvy
Financial Advisors will leave their large firms to go out on their own
as independents. The main reason for this is to increase their “payout”
on commissions. The payout can easily double what they earned working
for the big Brokerage house. Interestingly, many Financial Advisors, as
well as their clients, think that they have access to more products by
working with a major firm. That is a huge misconception. In fact, the
opposite could be more likely.
The fact is that today, there exist an enormous amount of conflicts
of interest in that industry. When you invest through a major Wall
Street firm, you probably assume the funds that are on the “Preferred
List” are there because the firm’s research department did extensive due
diligence and arrived at the conclusion these funds are the absolute
best investment vehicles for your money. This is just one example why
the small player in the stock market may not be making any significant
gains.
Real estate, on the other hand, offers a wonderful thing called
“leverage.” We can discuss that another time. Meanwhile, give me my
“brick and mortar!”
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Article Tags: finance industry, financial planner, merrill lynch funds, mutual fund industry, mutual funds, personal finance, proprietary funds, wealth planner, wealth planning
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About the Author: C.J Lauria RSS for C.J's articles - Visit C.J's website Click here to visit C.J's website   Red Flags To Avoid in a Mentor Reasons For Buying Cheap Houses Now When Does it Pay to Replace rather Than Repair What if I Get Into a Deal Where do I Turn What if My Credit is Shot I Have No Money |
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