Before we established our independent RIA firm we worked for a major global investment firm. One of the things that made us uncomfortable were the fees that were assessed for services that were free outside of the “Big Box Stores” like Merrill Lynch and UBS. In addition to paying exorbitant commissions, loads on mutual funds and hidden charges on bonds, clients were being charged a fee for simply having an account. To add to their bottom lines, the Big Box stores are always looking at ways they can get their customers to pay more for the same services. One of my favorite examples is the $5.25 fee that UBS adds to each transaction for “processing and handling.” This is a fee that does not improve the service and goes straight to UBS’s bottom line.
It now appears that industry leader Merrill Lynch is now revamping its fee schedule.
According to The Wall Street Journal, at least some of the more than 1 million clients with such accounts could see their minimum fees rise as much as 50%.
Without looking at the new fee schedule we are fairly confident that the new higher fees will hit the mid-sized and smaller customers hardest.
We had lunch yesterday with a client who has several accounts with other firms. He told me that he gets the occasional call from the reps at the other firms who try to sell him something. That’s not the relationship we have with our clients. We never call them to “sell” them anything. Our sole objective is to protect them from loss and to make them a fair return over the long-term. If your broker calls you to sell you the stock, bond or fund of the day, you don’t have a financial advisor, you have a salesman. What you want is an advisor who puts your interest ahead of his own. In other words, an RIA.