By: Jack WaymirecloseAuthor: Jack Waymire Name: Jack Waymire
Email: jack@paladinregistry.com
Site: http://paladinregistry.com
About: Jack writes for the InvestorWatchdog website and Worth magazine. He worked in the financial services industry from 1976 to 2004. For twenty of those years he was the president of a Registered Investment Advisory firm and a Broker/Dealer. Jack is the author of Who's Watching Your Money? The 17 Paladin Principles for Selecting a Financial Advisor and is a co-founder of PaladinRegistry.com.See Authors Posts (87) | June 25, 2009 | Bad Products & Services

Watch-out for mutual funds that charge 12b-1 fees.   These are legal fees that funds charge investors to recover their marketing expenses.  While the SEC does not limit this fee, FINRA caps it at .75%.

But don’t all companies pass their marketing expenses through to their customers?  Yes, but they aren’t mutual funds that are responsible for producing competitive returns for your assets.

In the case of funds, this is one more fee that is layered on top of several other fees and transaction expenses.  At some point, these combined fees are so excessive that the funds cannot deliver the performance you were sold.  Consequently, you paid high fees for bad performance - a huge rip-off. 

Mutual fund fees are deducted from your assets.  Fund families know most investors don’t watch these deductions very closely.  This is a big mistake.  Fees erode performance which means you will have less money for your future use.

Your advisor should provide an itemized listing of ALL fees that are deducted from your assets and accounts on a monthly basis. You should also review all statements and reports closely to identify ALL fee deductions and determine what services you receive for the deductions.