Re: AG Edwards management fee

Andrew White <> writes:

> >So, OP - what, exactly, are you going to get for that 1.25%?
>
> I see that I've left out a critical piece of information. The account
> that I'm opening is going to be invested into what they call a
> Cyclical Asset Allocation Portfolio Plus (CAAP Plus) consisting of
> about 15 or so ETFs from sector-specific Large caps, Mid caps, Small

Fair enough. Note that you are paying both that 1.125%
and you are paying expense ratios on those ETFs. ETFs
usually have very low expense ratios - comparable to the
best index funds. Overall, you are going to end up
paying something similar to the average management fee
of an actively managed fund. If you are getting a well
managed customized portfolio for that, that might be a
great deal.

Bear in mind that you may do just as well or better
by simply buying a "lifecycle" or "lifestyle" fund -
several of the major groups have them and they, too,
allocate your funds into a set of indices and rebalance
as necessary. Sine you are simply going to end up with
the allocation that the CAAP+ portfolio gets you, if
there's a "lifecycle" fund that has a similarly appropriate
portfolio, you may do better by saving on expenses.
You may not, and, of course, there's the question of how
you ended up selecting that asset allocation in the first
place. If the AG Edwards guys have sat down with you
to figure out that CAAP+ is the best for your situation -
and they are going to keep having those conversations
with you and continually re-evaluate that, you may be
getting a decent value for your money. But if they are
just sticking you into that program and letting it sit,
you aren't getting anyhing more than you'd get from one
of those funds, but for several times the price.


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