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The Mutual Fund Store / Scam artists

1 United States Review updated:
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Here is the scene. There are a group of financial planners sitting around a table and one says, 'I have an idea. Why don't we stop charging commissions and just charge a small annual management fee.' This way we will make less money and the client will make more'. The reality is the planner makes more although it sounds like a better deal for the client.

This is the easiest lie to sell in the financial services business. 'We do not charge a commission, we only charge a small annual fee'. You hear this guy, Adam Bold on the radio every weekend telling you that you should avoid the 'greedy brokers' that charge a commission. The actual fact is the 'greedy broker' charges a lot less than The Mutual Fund Store.

The Trojan Horse is that the 'greedy broker' charges a one time fee whereas the mutual fund store charges at least 1 1/2% fee every year, even if your account loses money. Let's look at what happens if you invested $100, 000 with the greedy broker. Your sales charge is a one time fee of $3500. Assuming you are in the investment for ten years with the mutual fund store your fees total a whopping 15% of your original investment which is $15000.

If your account makes no money nor loses no money for the ten years your balance at the end of ten years would be less than $85000. If you do the math and assume that your account grows by 10% per year your fees to the mutual fund store total over $24000.

This is why he hammers other brokers and annuity salesman. He talks about greedy brokers and annuity salesman like they are lepers. He spends most of his show speaking ill of others in his industry. The fact is, in the recent economic down turn, his investors have lost a lot of money, while those who invested in annuities have lost no money and paid no fees and their accounts are actually up in value. Sadly, his investors have lost a lot of money and they will lose some more when he deducts his fees from their accounts. To his credit, Adam Bold is a great marketer but don't expect him to tell you the truth.

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  • Ar
      29th of Jun, 2009
    0 Votes

    Yep. This is true. Calculate it yourself. Figure that the funds the Mutual Fund Store puts you in typically charge 1.25% to 1.5%. Add that to what the Mutual Fund Store charges you (1.5%) and you are paying approximately 3% in fees. Next assume "normal" market return for the last 100 years of 7% and you are paying 42% of your gains back in fees(assuming you get the "normal" which is no gurantee). They try to tell you they can pick mutual funds before they have great returns. Sorry Charlie, NO ONE has yet figured out a way to do that anymore than they have figured out how to pick stocks. What you end up paying for is a generic asset allocation pie chart that you can find online for free.

  • Mu
      28th of Jul, 2009
    0 Votes

    Here's another thing to consider. Even the mutual fund industry says 80% of active managed funds don't beat their benchmark index. The 20% that randomly do, only are able to do so by taking excess risk. Which means the funds look great one or two years and then do way worse the next couple years. Looking at The Mutual Fund Store strategy, they are simply cherry picking funds that did well last year and selling them to you this year. You are now in funds that have a greater probability to do WORSE then an index fund. Add in the huge fees they charge and you almost lock in bad returns. Hey and asset allocation models are available for FREE all over the internet. Why would anyone pay thousands of dollars for someone to say you need 60% stocks and 40% bonds and then hold this allocation for the rest of your life or at least as long as you are paying me fees!

  • Br
      8th of Aug, 2009
    0 Votes

    I have nothing good to say about Adam Bold and his system. He spends more time on the radio soliciting than watching over my hard earned dollars. My experience with the Mutual Fund Store was poor and I would not suggest their services.

  • Xm
      11th of Aug, 2009
    +2 Votes

    Well I can see that some annuity salesmen are really publishing some garbage. These are comments by people who have no real personal experience with the Mutual Fund Store, and state the standard generic uninformed drivel. Well I am a investor who uses the Mutual Fund Store services. I have a very aggressive portfolio for long term growth. During the downturn, I lost value, just as anyone else. However I lost about 10% less than I would have with a major commission based service. I checked and talked with an advisor from such a service. So far this year I have already almost completely recovered all losses. I have multiple accounts with the store and all are remarkably up, as much as 12% return (increase in total account value) in one month. My advisor has been extremely helpful, and very very attentive. Very active management of my funds, with genuine customization of service.

  • Th
      5th of Sep, 2009
    -3 Votes

    That last poster must be a mutual fund store employee. The only defense they have of their rip-off methods is bring up another rip-off method, annuities that are just as bad, due to the high fees, same as mutual fund store. It's the same thing, its called a wrap program. Variable annuities are nothing but a basket of mutual funds just like the mutual fund store wrap program. They will bring you in, tell you need to be in some allocation percentage which they base on a 5 minute questionnaire, and then just load you with mutual funds that you could just as easily buy yourself for FREE. Then they start dinging your account every quarter for fees, even though they do ABSOLUTELY NOTHING during this time. After 6 months, if you are lucky, you get a call from a secretary who says its time to reballance, and they spin your account for a few buys and sells which in effect doesn't alter its risk-return spectrum one iota. It's almost guaranteed to do worse than a generic group of 4-5 low cost funds or etf's that you could pick yourself for FREE. Why do I say almost guaranteed to do worse? BECAUSE it's already a huge gamble that any of the funds they pick will return what they claim, based on historical returns picked from the benefit of hindsight, while you happen to own them, and their layered fees seal the deal and that is where the guarantee of poor relative returns come into play. If you want to use these guys go in and ask them how many funds they have put on their list and how many they have removed. See if you get a straight answer... Why do they remove so many? Because of bad performance that they can't answer to any questions on why they are in peoples portfolios. Bold? He's an advertiser, not some kind of mutual fund picking expert. If you want that, read for FREE! Better yet, buy the premium service for $100 a year and save $$$Thousands in fees.
    I think logically, this company caters to the stoopid, and people that are severely deficient in any financial matters at all. Anyone that takes a few minutes to really study the impact their fees will have, will find better alternatives. With the interenet, it doesn't take much to learn this business these days.

  • Do
      11th of Sep, 2009
    -1 Votes

    you people might want to consider going back to 1st and 2nd grade to brush up on your grammar and spelling. You should all be embarrassed to write the way you do.

  • Ju
      12th of Sep, 2009
    -1 Votes

    I was a customer of theirs. I kept hearing ads for $199 per year on their radio show. So I called and and asked the advisor why was I paying over $2, 000 per year in fees to them. He said it's only $199 if I have a 401k!!! So I said, you can tell someone which funds to use in a 401k for $199 and you are charging me $2, 000?!. I closed my account with them the next day. Don't believe me? Call them and ask them yourself.

  • Sh
      15th of Sep, 2009
    +1 Votes

    They have a list of funds and everyone gets the same funds. If you want to see something funny, ask them for their list. They HAVE to provide it to you free of charge . Watch the sales rep start dancing around that question. They just make their presentation to you based on which of the funds in each category looks the best at the time you happen to come in.

  • Wi
      27th of Sep, 2009
    -1 Votes

    There is a commercial that Charles Schwab is running that says, "when my broker said, I make money when you make money, but he NEGLECTED to tell me that he also makes money when I lose money, or do nothing with my money." Sounds like they are talking to the Mutual Fund Store. Put your money into these funds, leave it there, and keep paying for someone to do nothing but tell me to hold until I die. All the fund they recomnmend are only positive for people who put money in the last few months. Anyone with them longer than 6 months is DEEPLY in the hole, but yet they keep taking their fees. FOR WHAT? What did they do to earn any of it?

  • Dw
      4th of Oct, 2009
    0 Votes

    First off, many of the so called independent brokers ARE lepers and ### and I am very suspicious that several of the posts here are from those of the same ilk. I know from personal experience about those blood suckers. Talk about a sociopaths?

    No one performs a service for free. NO ONE! The funds you are invested in are based upon your personal risk tolerance, as they should be. I have some of those same funds I bought through a discount broker and I researched them independently and didn’t buy because TMFS or Adam Bold suggested them. I don’t agree with all of his investment advice on the mutual funds, but so far I have done pretty well with the TMFS. When you consider that financial investment is essentially gambling you just have to be prepared to take the lumps when the economy tanks as it did last year. Grow up and get over it. If you think for one minute and independent broker sold you a fund that lost money and didn’t get a profit, think again. When all is said and done it is just business and everyone, including us, are in it for the money. I don’t expect them to work for free. I also suspect that some of the branches have better and more experienced employees running them than others, but, the same could be said for the best brokerage services. Even the good ones drop the ball now and then. I won’t say they hung the moon, but so far I have done OK. Should that change I am a big boy and perfectly capable of pulling my money out and going elsewhere.

  • Sk
      7th of Oct, 2009
    0 Votes

    That's a fine couple paragraphs there DWA269. Which location do you work for? When you start seeing ACRONYMS in commentary, you know you got an employee in the house.

  • Co
      14th of Oct, 2009
    0 Votes

    I had a very large account with the Mutual Fund Store, the operative word being “had”. I did well during the up market out performing the S&P 500 by a few percentage points. But my investments underperformed all measures of the market on the downside even though I was in a moderate risk category. My self-managed 401K with limited choices did 10% better in the down market, and, because it lost less, is recovering faster. Mr. Bold says that if you take the risk of the market, you are entitled to be in the best funds. I found that in the down market, over half of my funds performed in the lower 50% percentile in their respective categories and for a period of time, over a third were in the lowest 25 percentile. Mr. Bold excuses this on his radio show by saying some of the best fund managers fared poorly in the down market. That raises the question as to whether the fund mangers the Mutual Fund Store picks are the best.

    I found that even though we were in a down market of biblical proportions, the Mutual Fund Store made no substantive changes in my account. Active management simply meant they periodically rebalanced my account. In a down market, this means that the better performing funds were sold to buy more of the poor performing funds. I lost faith in the store when they bought more Hodges Fund (HDPMX) even as it continued its slide losing 70% of its value, was rated the worst performing fund in its category, and had performed poorly for almost two years. Mr. Bold continues to promote this fund even though Morningstar rates it two stars. The only change I saw in the down market was the Mutual Fund instituting a fund watch list. My interpretation of the watch list was that it was a way of appearing to take action without actually taking action.

    Finally, Mr. Bold advertises that your Mutual Fund Store advisor will periodically contact you to review your account. To be fair, you do get a quarterly report and my advisor did call back when I called with questions. However, most communications were voice mail simply stating they were rebalancing my account. During one of his radio shows, Mr. Bold stated that he had 25, 000 clients and 300 employees. Assuming that not all of his employees are advisors, simple math would indicate that his advisors average over 100 clients each. In addition to handling clients, the Mutual fund Store is always offering free reviews for prospective clients. Don’t expect a hand holding advisor. As for the quarterly report, I asked that the report include the ranking of the funds and explain why poorly performing funds were being held. I received a negative answer and was told that the rationale for holding funds was proprietary, a strange answer considering Adam Bold gives out the same information freely every Saturday morning.

  • Sq
      15th of Oct, 2009
    -1 Votes

    Conejos, your experience is consistent with mine. There is virtually zero investment management done for clients. It's the same thing for everyone. Same funds. The Mutual Fund Store defines investment management as moving you from one fund on the list to another one, regardless of what the market is doing. You mention Hodges Fund, which is a concentrated high risk fund. It made it on the list because it had some blowout quarters a few years back which made it look great on presentations, making the "pitch book" look that much better. Problem was, The Mutual Fund Store didn't own it when it had the blow out numbers. They jumped into it after the fact. That is the M.O. of this company. Load into funds that look great on presentations. It's all just performance chasing. You mentioned the number of employees. Check out how many people are in the office anytime you go in. Usually, no more than 1-3 people. They have to cover rent and pay a huge ad fee to the radio stations to pay for their hour long commercial every Saturday, then on top of that they have to pay a huge royalty of 30% of their revenues to the franchisor. This can all be found by doing a little digging through their franchise agreement.

    So you have one, maybe two advisors that are having to handles many hundreds of accounts just to break even. Even if they wanted to, you can't do any serious investment management for people when you are responsible for that many accounts. It's just stick em in mutual funds and hope like hell all goes well. If anyone complains, their defense is, "your questionairre says you should be in 60% stocks and 40% bonds, and we reallocate every quarter." That's it. Nothing else. Several of the funds they use are allocation funds themselves, so why would anyone pay a fee for "asset allocation" only to have them put you in an asset allocation fund. It's like paying for gas at the pump and then walking inside and paying the clerk at cash register also.

  • Ta
      17th of Oct, 2009
    -1 Votes

    To the original poster: I DID the math. I only had to do one-quarter's worth of math in your hypothetical of a $100, 000 account that makes no money or loses no money for ten years. The Mutual Fund Store's fee is .375% on a trailing basis, so it would take $375 the first quarter. That leaves $99, 625 in the pot, ergo the fee would be something less than $375 in the second quarter and every succeeding quarter over the 10-year period. Thus, it would not add up to $15, 000 in fees.

    The term "dumb schmuck" comes to find when thinking of someone who would leave their account with The Mutual Fund Store or ANYONE ELSE to stagnate for ten years and they deserve what they get.

    By the way, Fidelity Investments, for example, has the same 1.5% fee structure as The Mutual Fund Store to manage your account. Oh, yes, the management fees of any mtual funds they purchase for your account (including their own Fidelity funds) will be passed on to you---just like The Mutual Fund Store.

    The negative posters here sound just like the ones who subscribe to any of the many football betting tip sheets and then cry when every game isn't a pointspread winner or every weekend isn't a winning weekend.

  • Wa
      18th of Oct, 2009
    +1 Votes

    It comes down to this simple issue. FEES. That's it, nothing else matters, because history proves that NO ONE can predict or time the market. Not Bold nor the fund managers he alleges are so superior. It's all smoke and mirrors at several levels. It's like the people that in years past sold Health Elixer from the back of a wagon for whatever ails ya. These people like Bold can spin their yarn to reach enough people to always stay ahead of those that eventually figure out they are being taken to the cleaners. The investing community relies on only the past 70-80 years of market history to claim that buy and hold will get you to riches. When in reality buy and hold only gets the purveyors of the elixor to riches at the holders expense for taking much more risk than they are cognizantly aware of. Over a cylce longer than most of our lives, the best one can expect to do is 8% in 100% stocks, the most aggressive position and therefore, theoretically, the most rewarding. But a mutual fund wrap program like The Mutual Fund Store is guranteed to suck 3% of that return in fees, leaving the investor with 5%. Why would anyone take the maximum risk to ultimately get a long term return that is quite close to the return of corporate bonds? The answer is because they are sold a con. They are told they will outperform if they just give the "system" 5-10-15 years to play out. By that time, the investor has paid a huge sum of money in fees and figured out he got nothing of extra value for it. Does the Mutual Fund Store care about this? No, they don't because they will have a new set of schmucks who start the process all over again who they can tell the same lie to over and over and over. The best thing people can do is keep the process simple, by not feeling that they need to "outperform" any index. Use low cost investment strategies and avoid rip-offs like annuities, mutual fund wrap programs, and most importantly purveyors of easy riches, high returns and anyone who promises they have found the secret to "outperformance", because anyone who makes these types of claims is lying simply to enrich themselves at your expense.

  • Yo
      24th of Oct, 2009
    0 Votes

    The #1 Immutable Law of the Universe:
    If you offer people a lot of money to do something, no
    matter how foolish, unethical or illegal, a large
    number of them will do it.

    The people engaged in such behavior will
    rationalize it such that they genuinely believe that what
    they’re doing isn’t foolish, unethical or illegal.
    The #2 Immutable Law of the Universe:
    Bad behavior leads to bad consequences.

  • St
      24th of Oct, 2009
    +1 Votes

    So Mr. Bold who claims to be such a genius of picking mutual funds based on the manager, was so successful that he had my mom's money in one of the WORST funds EVER! Schwab Yield Plus. One of his "great advisors" told my mom this fund was a safe as they come. She lost nearly 1/3 of her money in that fund before they DID ANYTHING! Then today I read this article and it all becomes clear:

    Another is that indexes minimize some of the worst aspects of human error. Think about the most terrible bond-fund blowups of 2008: the Oppenheimer Core Bond Fund (NASDAQ:OPIGX - News) or the Schwab YieldPlus (NASDAQ:SWYSX - News) fund or those Regions funds. In the case of short-term bond funds in particular, a lot of the managers just yielded to the temptation of chasing yield and putting in a lot of mortgage garbage because they could goose the yield. If you bought a short-term bond index fund, you just didn't get that sort of thing. There are short-term bond ETFs, and none of them blew up because the computers--the machines--didn't have much interest in mortgage derivatives. The humans running active funds, on the other hand, were hell-bent on earning a bonus based on how much yield they could produce.

    I guess the overriding point is in my opinion it's extraordinarily difficult to pick individual securities that will outperform a market benchmark, but I happen to think it's even harder to select managers who will outperform a category average. I think that's even harder, and it's harder because you have all kinds of second-order effects. You have asset growth, you know, "This person was great when he was managing 200 million bucks, but now he's got $10 billion. Is he still going to be able to do it?" Well, who knows? If you ask him he will say he will, but asset growth can kill performance. Then maybe he's made so much money he's fat and happy and just wants to spend some time on his yacht. And if you ask him, he's going to tell you, "No, that's not true, I'm still hungry."

    It's extraordinarily difficult to pick a great manager who will still be great. And the most basic reason for it of all is that luck is really the driving force, to the extent that most investors don't appreciate and can't appreciate because it makes people uncomfortable, but it happens to be true.

    I'm not saying that active management is bad or futile, or that I think everyone who invests in an actively managed fund is an idiot. What I am saying is that it's extraordinarily hard to get it right, and maybe the best reason of all to do it is if you can find a manager whose view of the world is really similar to your own. Because then you're a lot more likely to go along for the ride. Like Morningstar, for many years I've been almost obsessed with the concept of dollar-weighted returns as opposed to the time-weighted returns that everyone reports. And all the arguments in the fund business and among financial advisors are really about basis points, is this better than that, is this kind of fund better than that kind, is active management better than passive management? But the real debate should be about percentage points, not basis points. And the percentage-point-gaps are the gaps between the returns of the investment and the returns of investors. One really good way to close that gap is to get people into funds that make them comfortable. A charismatic, eloquent, dynamic, confident active manager is someone you might be able to be loyal to when you can't be loyal to a computer program. Index funds don't have personalities, and they can't write much of a letter to their shareholders. A great active manager can be a magnet for loyalty, and that's really important. And I would never denigrate that, and in fact, most investors would probably be better off putting their money into a mediocre fund they could be loyal to than a whole series of great funds that they go barging in and out of at the worst possible times.

  • Jo
      1st of Nov, 2009
    +1 Votes

    Adam Bold was pimping funds throughout the approx. 50% downturn which hit (essentially) all sectors of the market, only to boost his own bottom line. That's all I needed to know to conclude he's in it for himself, not his customers.

  • Ol
      2nd of Nov, 2009
    0 Votes

    Everything is about Adam Bold. EVERYTHING going into his OWN pocket! But as long as there are enough lazy and foolish people who are not willing to dig a little he and his minions will keep taking their money for doing very, very little in return. Same reasons that email scams continue to proliferate; there are some real schmuks out there who fall for anything they are told. Bold blabs weekly about picking the best and most consistent funds. Take a look at the junk he's recommended, well, first of all, he doesn't tell you ALL the crap he has to sell at lows and huge losses, all he talks about are the one or two funds that you can ALWAYS find in hindsight and talks as if he found them before they had a run.

  • Tb
      10th of Nov, 2009
    0 Votes

    Why not just invest in a couple of Allocation Funds with the bulk of your money, put about 10% into an international fund or index, 10-50% in bond funds, depending on your situation, 5% in a speculative growth fund, and then bank the cash that you would otherwise pay to the fee mongrels into CD's. If you have a 100k portfolio, after 5 years you'd have amassed $7, 500 into your CD's (not counting interest), that you otherwise would have tossed into the pocket of someone else! So if the market is totally flat, you are still UP 7.5%, and the only cost is that the fee mongrel gets one less vacation.

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