One of the reasons I wrote my book, Millionaire Teacher, was to protect expatriate Americans from firms like Raymond James Financial.
The book became an international bestseller, spreading the message that most financial service firms were treating their clients like mushrooms—kept in the dark and covered with… smelly stuff. But expatriate Americans can use Raymond James Financial to their benefit, and I want to show you how.
Clearly, I targeted Raymond James in my book – and rightly so.
With silver tongues, their reps ask about their clients’ families, bring glossy charts showing non-properly benchmarked past performances, while gouging their clients in hidden fees. The expression, “properly benchmarked past performance” might sound complicated, so let me explain:
If you’re a 30 year old with 20% of your money in bond funds and 70% in world stock market funds, then an advisor must compare your returns to the equivalent indexed benchmark. For example, he or she would need to compare your portfolio with the results derived from a portfolio comprised of a 20% bond index, blended with 70% in a world stock index. Doing otherwise, is misleading.
Rarely do Raymond James reps offer low cost indexed products because they get paid less for doing so. And sometimes, they take the cheeky option to double-dip: buying their clients actively managed mutual funds (which are more expensive) while charging wrap fees as high as 1.75% to do so. This ensures that they get paid twice at their clients’ expense. Yeah, we’re on to you James B!
Having said that, you could still use Raymond James without catching their self-serving wrath: in the background lies an ability (should they choose) to buy extremely low cost, Fidelity index funds for their clients…
How cheap are these funds?
These funds rival Vanguard’s low cost options. They’re among the world’s cheapest. And you could buy them through your friendly, roaming Raymond James rep. No, they won’t willingly sell you these funds; you’ll have to insist. And don’t let them slap you with an annual wrap fee for their service. These folks will be compensated for their assets under management.
Here’s a sample portfolio of Fidelity indexes that you could buy, using Raymond James as your broker. There would be NO FEES to buy these funds and NO FEES to sell them. The following account is diversified and virtually maintenance free.
- 45% of your money in the Fidelity Intermediate Bond Index
- 30% of your money in the Fidelity U.S. (S&P 500) Stock Index
- 25% of your money in the Fidelity International Stock Index
What’s the catch?
Fidelity doesn’t make much money on these funds, so if you buy them, Fidelity wants a big commitment: at least $10,000 invested into each fund to start. After that, you can invest much smaller, regular sums which Raymond James could facilitate for you. If you don’t have $10,000 to get started with a single fund (or $30,000 to build the completed portfolio above) then start saving. Once you have your first $10,000, ask your rep to buy you one of the three funds listed above. When you save your second $10,000, buy the next fund. Once you’ve established a position in each fund, you can start adding very small regular sums on a monthly basis, should you choose.
Just remember to stand your ground, and before engaging your advisor, read a copy of Millionaire Teacher (or one of the other books I recommend on my website. You’ll be glad you did.