How We Are Compensated

How do I get paid, if I don’t charge a commission?

The mutual funds I recommend are sold “front-end 0% commission”. The mutual funds companies in turn pay what is known as a ‘trailing fee’ to the dealer, Armstrong and Quaile Associates Inc. (of which I receive a negotiated percentage). The exact amount can be found in the prospectus but in general the trailing fee paid is 1.00% for front-end equity funds and 0.50% for front-end fixed income funds. Very few advisors offer mutual funds for 0% commission (no load); they typically negotiate an up front commission (0-5%). More often than not though, mutual fund advisors recommend back-end mutual funds for their clients. The reason for this is that in addition to the trailing fee, the fund companies pay the advisor up to 5% as soon as the purchase is complete. The advisor is still paid a trailing fee paid which is generally 0.50% for front-end equity funds and 0.25% for front-end fixed income funds. The disadvantage to the client in using back-end mutual funds is that the mutual fund companies impose what is known as a ‘deferred sales charge schedule’ (DSC schedule) on all back-end funds. If you are an investor that has had to redeem back-end mutual funds before the expiry of the DSC schedule, then you are painfully aware of the costly penalty. The fee can be as high as 6% of your entire mutual fund value if redeemed in less than one year! Because there is no up front payment for front-end mutual funds sold at 0%, the mutual fund companies do not impose any fee for early redemption after 90 days.

Disclaimer: “Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.”

Please review the articles below as they discuss these options more fully and include both pros and cons.