New US Retirement Account Laws

[Dividend Watcher]

(04-07-2016, 06:34 PM)Caversham Wrote: However, my understanding is still this:  Some brokerages (Schwab, Fidelty, Scottrade, E*Trade, etc) will begin charging annual fees as opposed to commissions.  If my brokerage does this, then I will need to move my IRA.   Is this not correct?

Did they tell you that? The competition is fierce for brokerage customers. I can assume they might for managed accounts if they can make more money from a flat fee rather than commissions but none of it is set in stone until they publish their fee schedule. I know TD Ameritrade has really been pushing their managed/advisory accounts for a while.

On the flip side, this regulation has been in the proposed stage for several years and it will take some time to implement so it's not like it's a newsflash. In any case, the government won't get any of those fees unlike what the discussion had devolved to. It will all flow to the brokerage house.

Then again, I don't get the whole Assets Under Management (AUM) rip off fees, either. Why is it a 40 year old who has $250,000 to invest and gets told to put 60% in an S&P 500 index fund and 40% in a medium term government bond fund* get charged a higher fee than someone with only $100,000 to invest with the same recommendation. On top of that, some (many?) investment advisors will steer an uneducated investor to an Oppenheimer or American Funds index mutual fund with a 5-7% load on top of the fund's management and 12b-1 fees. They give the same recommendation to both but one pays a higher "actual dollars" fee. There no creative difference of effort there.

* The funds are just examples. Just pick your own variant of a MPT fund allocation.