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Financial professional listed on statements
Old 07-23-2014, 09:52 AM   #1
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Financial professional listed on statements

Probably over 20 years ago, my parents bought a load mutual fund from a financial adviser/salesman. (He called himself a financial adviser and I always called him a salesman). He is still listed on their statements as "financial representative" even though we have not heard from him in years! I know because I'm taking care of the mail and financial matters. In this particular fund, the dividends and capital gains are being reinvested into more shares. My question is, is this guy still getting paid for being the financial representative? Or is it usually a setup where he gets paid when the shares were bought? I've always wondered how their setup works, he gets clients to buy a mutual fund that has a load - does he get a portion of the load? He has to get a cut I would think. The "load" was a 5% and would have been the same had they bought it directly from the mutual fund company or going through the salesman. Either way, I'm probably going to remove him from the account.
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Old 07-23-2014, 11:24 AM   #2
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Quote:
Originally Posted by David1961 View Post
Probably over 20 years ago, my parents bought a load mutual fund from a financial adviser/salesman. (He called himself a financial adviser and I always called him a salesman). He is still listed on their statements as "financial representative" even though we have not heard from him in years! I know because I'm taking care of the mail and financial matters. In this particular fund, the dividends and capital gains are being reinvested into more shares. My question is, is this guy still getting paid for being the financial representative? Or is it usually a setup where he gets paid when the shares were bought? I've always wondered how their setup works, he gets clients to buy a mutual fund that has a load - does he get a portion of the load? He has to get a cut I would think. The "load" was a 5% and would have been the same had they bought it directly from the mutual fund company or going through the salesman. Either way, I'm probably going to remove him from the account.
Usually the salesperson gets the entire load, less whatever overrides go to his supers. He also will ordinarily get some part of what comes out of the fund annually or more likely quarterly as 12b-1 fees. This will be stated on a fund-wide basis in the prospectus. In most cases it will not help you to remove him if this can even be done, other than to spite him for selling this to your parents, as the 12b-1 fees will continue.

It's the gift that keeps on giving.

If you parents pay taxes it may not be worthwhile to sell this fund, since there are likely large ltcg's. Which night even make you feel better about this salesperson.

Ha
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Old 07-23-2014, 11:34 AM   #3
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Sometimes he's just listed on the statement but not actually getting paid anything on an ongoing basis on the account.
What Ha said is the most likely scenario, top to bottom.
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Old 07-23-2014, 02:21 PM   #4
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Sometimes commissions are spread over ten years if the account is still active. Since its been twenty years I doubt the "salesman" is getting anything now.
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Old 07-23-2014, 02:48 PM   #5
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12b1 fees would keep paying someone- a person at broker (or the broker themselves) keep the 12b1 fee

the sales load is charged on initial purchase and new money into account
I do not think reinvested dividends trigger new sales loads

If the share class is a B or C share, there could be a sales charge when you sell depending on how long the new shares were held

I could see dividend reinvestments into B or C shares triggering a back end sales charge maybe...
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