Ever get curious as to why brokers seem to push mutual funds more often than Investment Advisers? It is in your best interests as an investor to know why.

1. Mullooly Asset Management Podcast
May 8, 2013
Mullooly Asset Management May 2013

2. Why Brokers Sell Mutual Funds
(and Advisers Buy ETF’s Instead)
Finance committee member for my local parish
Have a large brokerage firm handling investments
Mullooly Asset Management May 2013

3. Why Brokers Sell Mutual Funds
(and Advisers Buy ETF’s Instead)
Account is full of C-shares (low level load funds)
- do not have an upfront charge
- typically a 1% annual 12b-1 fee
If the fund “earned” a net return of 9%, it actually
earned 10%
Mullooly Asset Management May 2013

4. Why Brokers Sell Mutual Funds
(and Advisers Buy ETF’s Instead)
Asked why they did not consider Exchange Traded
Funds
- “They would have to pay a commission”
- “Even after a discount the commission would be
about 1%”
Mullooly Asset Management May 2013

5. Why Brokers Sell Mutual Funds
(and Advisers Buy ETF’s Instead)
With PTTCX annual expenses are 1.60%
With C-shares may not pay out of pocket to own but:
- Pay a 1% fee every single year you hold fund
Ex.) You have $200,000 in one fund, you pay
$2,000 every year in built in fees
Mullooly Asset Management May 2013

6. Why Brokers Sell Mutual Funds
(and Advisers Buy ETF’s Instead)
With an ETF you pay a commission to buy and sell
but:
- costs are typically lower than owning a fund
If your investment adviser places trades through a
discount broker (they should) you’ll find that the
“big scary commission” to be $10-$12 (possibly free!)
Mullooly Asset Management May 2013

7. Summary
A fee-only investment adviser will work to keep trading costs
low
Broker has to get paid, even their fee programs are "fees-in-
lieu-of commissions”
Brokers don’t win trips and get awards for making the
most money for their clients
They get recognition for generating most revenue for their
firm
This *could* skew the products the broker offers/shows their
clients. Mullooly Asset Management May 2013

8. None of the securities mentioned in this (or any)
podcast or video represent past specific
recommendations of Mullooly Asset Management.
This video is NOT a recommendation to buy or sell any
of the securities mentioned here.
If you’re relying on a podcast for investment advice, you
are likely making a huge mistake.
We strongly urge our listeners to consult with their
investment advisor before they make a decision to buy
or sell any investment.
Mullooly Asset Management May 2013

9. Mullooly Asset Management, LLC
support (at) mullooly (dot) net
732-223-9000
www.mullooly.net
Mullooly Asset Management May 2013

10. Mullooly Asset Management, LLC
support (at) mullooly (dot) net
732-223-9000
www.mullooly.net
Mullooly Asset Management May 2013