Monday, March 16, 1998

New Fool Meets Full Service
by Gordy Blaze Oliver ([email protected])

A college friend of mine became a stock broker at the home of the symbolic large geological formation. Five years ago he sold me a mutual fund for my daughter's college account. Then he sold me different mutual funds for me and the missus's IRAs.

In the ensuing years my learning curve steepened, then approached its zenith: in March 97 we got on the net, and I discovered the Fool page. Last year, both of ours IRAs significantly under-performed the market (15%). Again.

I applied for an account at AmeriTrade (researched the different IRA fees at the other brokerages on the Fool page) and filled out lots of transfer requests. I finally had to explain to my friend why I was taking the money elsewhere. I alone noticed our portfolio was doing poorly (practically for every year since its inception). You mean I have to pay a yearly IRA fee AND pay up-front loads?

His reply won't shock Fools: "Well, we could get you into other better-performing funds. Oh, and how about this technology trust account?" And as he so aptly put it: "I gotta tell you; it's a big mistake going to a discount broker. Lots of trading will lower your yield. If anything look at my higher fees as a deterrent against excessive trading!!"

I didn't miss the irony as he put me on hold so someone else could dump tons of Intel shares during its last run-up. Brokers are salesmen first and foremost and his deterrent is as quiet as a nuclear-powered ballistic submarine.

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