Here is an excerpt from the front page of the Wall Street Journal on Jan 11, 2018 – “Investors who seek advice from discount brokerage firms might assume the counsel they get is impartial, given how these firms have rejected the old Wall Street model of working on commissions. In fact, advisers at some of the biggest discount brokerage firms make more money if they steer clients toward more-expensive products, according to disclosures from the firms and people who used to work at them. That means customers could end up with investment products and services that are costlier than they need.”

It goes on to state that sales representatives at Fidelity, Schwab and TD Ameritrade get paid 0.04% of assets clients invest in mutual funds and ETFs but get paid 0.10% of assets if they move clients to managed accounts and financial advisors. These advisors and managed accounts then add on fees upto 1.7% of assets. And then, there is churn in the clients portfolio that generates trading fees to the firm every time an investment is bought or sold. All in – clients end up paying up between 1.5% – 2.5% of assets per year to these discount brokers. Fees at full service firms like Morgan Stanley, Bank of America Merrill Lynch etc. run much higher 2% – 3.5% of assets per year.

This is the dirty little secret that none of these discount brokers or any major brokerage will never tell their clients. Only thing that they want the clients to hear is that “Their representatives do not work for commissions.”

Future Wealth’s View

Future Wealth was founded on the premise that investors who need personal attention in constructing a solid long term portfolio should not be paying exorbitant fees that ultimately impacts the long term performance of the very portfolio they are trying to maximize.

Here at Future Wealth LLC, we understand that you shouldn’t have to pay 2-3% per year in advisory fees, management fees, transaction fees and hidden fees to get investment advice from someone that has neither worked on Wall Street nor is willing to give your portfolio full attention. And so, we created a fee structure that will not exceed 1% of assets under management* all-in.

Yes. We, at Future Wealth, may not be pulling six figure Achiever bonus that financial consultants at Fidelity enjoy or an all expense paid vacation to Hawaii courtesy of Schwab’s Chairman bonus, when they push products that the firm wanted them put in clients portfolio whether it was suitable or not to the client. And that’s ok. But, Future Wealth will never be accused of misleading our clients in the front page of the Wall Street Journal.