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I think it rolls out something like this…

1.  Mutual fund manager “A” has a marketing team “B” (the 12-b-1 fee) that needs to feed their kids.
2. Team “B” has a job, and that job entails taking the current peoples money, and making more money out of it by touting how great manager “A” is.
3. Team “B” talks with advertising company “C” and says that they’ll certainly endorse their product if they say company “C” is behind manager “A” and the fine work that he does, and in turn, they’ll give a cut of manager “A”s profits to advertise this (the 12-b-1 fee).
4. Company “C” also has bills and mortgages to pay so they gladly take team “B”s money, which is really manager “A”s money that he is taking off the top via the expense ratio of his giant fund.
5. Company “C” now has money invested in manager “A” and team “B” has a little worker “B” in company “C”.
6. Manager “A” needs to look good for team “B” and company “C” now because company “C” has said “manager “A” is so great and that he has returned “X”% over the past few years.
7. Company “C”s strong endorsement of Manager “A” prompts groups “D”, “E”, and their buddy “F” to hop on the bandwagon in soliciting Manager “A”;
8. Now fortunately for manager “A” though, groups “D”, “E”, and their buddy “F” have their fingers in the major pots like Edward Jones and Ameriprise Financial who have vested interest in selling people pieces of manager “A”s business, which is really theirs via “B”, “C”, “D”, “E” and buddy “F”.
9. Conveniently buddy “F” has a friend that works high up in a company that manager “A” endorses. If buddy “F” has no knowledge (so they say) that manager “A” is a big piece of his puzzle, who is to say that 6 people down the line (buddy “F”)knowing what is happening to “A” is illegal? Everyone in the world is supposedly within 6 degrees of separation, so in theory, everyone knows everyone, true?

The list really could go on and on, but ultimately it is about who holds the keys to the kingdom. In my humble opinion it is just a circular pattern (like an onion) that you need to be in to get in. There is no reason to bring on new onion layers; you’ve got billions upon billions of dollars already invested in keeping the money coming out from manager “A” to fund marketing for “B” through “F” and more.

What do you think? Spot on?  Plausible?  Outrageous?  Off my rocker?

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Tags: 401K, Emergency fund, Financial Education, Investing, Mutual Funds, Net Worth, Portfolio, ROTH IRA, Retirement //