Most mutual funds with sales loads also have so-called 12b-1 fees, which are taken from a fund’s assets (actually, from the investors) to pay distribution and marketing expenses. The SEC limits 12b-1 fees to 1 percent annually, with a maximum of 0.25 percent going to brokers. Thus, a broker or financial planner who sold you a load fund and received a sales commission also pockets ongoing fees each year that you retain the fund.
For that fee, your advisor should provide you with more than one-time sales advice. You should receive some assistance in the future, too, such as updates on how your funds are doing.
That follow-up advice might come in the form of help with re-balancing your portfolio. Back in 1999, for example, your advisor might have pointed out that your allocation to growth funds had grown beyond the original plan. If you had been so well-advised, you might have moved some money out of growth funds and into value funds, which would have paid off in 2000 and 2001.
An advisor might provide you with tax advice, too. You might be told to sell one of your funds at a loss, for a tax advantage. Your advisor also might suggest a fund to buy as a replacement, to maintain the shape of your portfolio.
