4 funds and yearly fee of 60

[Guest misstifyd]

My husband has a Roth account which we got through our bank through Frankling Templeton. It is 4 funds, Growth (Franklin capitol growth fund), Value (Mutual shares fund), Global (Templeton growth fund) and Blend (Franklin growth fund). These are all Class B it says. The total value is 2,534 which 1.000 was invested in 2003 and 1000 in 2004.

We are getting charged a yearly fee of 15 per fund which with such a small amount invested not sure if we should keep it there.

We got a letter from Franklin stating that no longer do they accept money straight from us for class B funds and that we would have to go a financial advisor.

We called the advisor which we saw one time in 2003 and he told us that we have to buy different funds and we should do it ourselves or he would have to charge us.

We are wanting to put 3000 in a Roth soon.

What should we do? We have thought about E Trade with getting emailed our asset summary.

By the way he is 38 and we are looking at long term, we are not going to touch this money until retirement if ever, it may be given to the kids. We are looking at putting 3000 in each year, maybe the 4000 but 3 this year so far.

Thank you so much ahead of time!

Linda and Chris

[John G]

Some options:

1. It may very well be the bank that is charging these fees, often it is the custodian that charges the annual fee. If so, you might want to start by asking them to waive the fee in consideration of your other business. Always ask... worse response is just no.

2. See the link below from Kiplinger about Frankline Templeton class B shares:

http://www.kiplinger.com/magazine/archives...02/bshares.html

It looks like you got hooked into a back end loaded fund from your wonderful "advisor". Were you informed of the true nature of these two funds, the annual fees and the back end load or commission? I suspect your financial advisor had a FT incentive for placing you in these funds. This site excepted, advisors rarely do anything gratis. And let me be blunt, many financial advisors have a nice office and good suits but minimal training about making good investment decisions. I encourage folks to teach themselves the basics because I believe anyone with that finished high school can read enough to make reasonable decisions. There are tons of resouces... library books, the internet, mutual fund materials, fianncial magazines, etc. It is hard to find a good advisor - and not unreasonable to be your own advisor. No, this is not like doing brain surgery on your self. Learning about investing is a much easier then learning how to do a complicated tax return. I don't think it is unreasonable for an adult to spend 1 or 2 hours a month reading material about personal finance - some folks spend more than that reading the sports section.

3. You may have the option to combine the two funds and eliminate one of the annual fees. Your advisor should never have suggested two funds for such a small amount. It bought you minimal further diversification. When you start a Roth, you really only need one good general fund for perhaps 5 years. Then when your assets exceed $20,000 you can consider having two funds. General stock funds will often overlap in assets and even the "focused" funds (that only hold 20-30 stocks) have enough diversification.

4. Call FT and talk to them. Since they no longer will allow you to buy class B shares and they are dinging you for $10 + $10 a year. COMPLAIN! Ask them for a solution - but be wary of what they may suggest. You can also ask to be excused from the fees and be allowed to leave. After all, representations have been made.... they may be motivated to keep you happy given some of the bad publicity class B shares and certain mutual fund practices that have been in the news the past year.

5. You can go to another custodian and fill out forms for a custodian to custodian transfer of these two funds. But.... expect back end commissions and possibly a termination charge. All though you may hate paying these fees - and may even seek to have them forgiven if there was a shady practice issue (atleast ask or Google to see if there were any legal filings against FT about these class B shares) - it looks like this lesson may cost you less that tuition for a 3 credit course at your local college.

General Comment to all Readers: Folks! Ask questions, read the materials, spend some time with an internet search, and be wary of advisors who push products. There are 10,000+ mutual funds and perhaps 500+ potential custodians, and no reason to get stuck in a bad arrangement. After screening for NOLOADS, with low annual expense rates, and custodians with zero or low fees you would still have more combinations that would work than you could possibly study. And, how many funds do you really need to get started? One.

PS: You were up about 25% in two years, which is good!

Disclosure: I make no judgement about the potential investment success of FT funds. I have no direct experience with them. My comments above are related to the issue of two small Roths which will no longer accept funds but will keep dinging annual fees.

[Guest sunpharee]

There are 10,000+ mutual funds and perhaps 500+ potential custodians, and no reason to get stuck in a bad arrangement. After screening for NOLOADS, with low annual expense rates, and custodians with zero or low fees you would still have more combinations that would work than you could possibly study. And, how many funds do you really need to get started? One.

See, this is exacty what I want to avoid...$60 in fees add up after 30 years!!

how do you screen for no loads/low rates....? is there a website?

[John G]

All of the brokerages that I have some experience (Etrade, Scottrade, Schwab, Fidelity) have some kind of search system for looking for mutual funds: either online or in publications or more likely both. Search engines often allow you to sort by No load status, sector, investment focus, etc.

Magazines: Kiplinger Finance, Money, and the March Consumer Reports all cover mutual funds. They have stories, side by sides, lists, etc. Lots of info - too much info probably. The reason I like Consumer Reports is that they write for the layperson, every library has it, and they screen thousands of funds down to about 100 ones that seem to come out above average.

Mutual Funds: All of the big names (Fidelity, Vanguard, TRowe, Janus, Strong, Twentieth Century, etc.) have multiple funds. Typically their website and their publications explain the differences.

With all lists - ignor international, sector or any narrowly defined funds... maybe a few years down the road when you know more you may want to look at these, but not now. Avoid "hype" type funds - anything that seems gadgety or promises to solve all problems.

Remember ----> you are only looking for one good general purpose fund in year one. Don't try to sharpshoot the decision. Pick a general purpose fund (or index fund) that is no load, has reasonable low annual expense and seems to have demonstrated a reasonable track record over many years. Later, as you learn more, you can add put some more polish on your selections.