Dear Dr. Don,
I invested $156,000 held in a trust account with Franklin Templeton as suggested by my finance guy. I had to pay a 3.5 percent load upfront, leaving us with about $150,000. We invested in four funds. Then, we took the money out of a New Jersey tax-free fund because it wasn’t doing too well. The money is now invested in three load funds. I’ve had this adviser for years, but since it is my parents’ money I hope I did the right thing. Since we started with $156,000, we are down $10,000. I realize it costs $5,400 just to get into the funds. But the total balance is still not back to where it should be. What’s your advice?

Thank you,
— Barbara Betwixt

Dear Barbara,
My advice is for you to talk this through with your financial adviser. You need to work with someone who looks at the big picture about your finances. Even if the $150,000 represents your entire investment portfolio, there are three key areas to consider.

  1. The investments need to be within the context of your individual attitude toward risk.
  2. We need to know your goals for the investments.
  3. And, we need to consider any possible pension or Social Security income you expect as sources of retirement income.

Although you might want me to say whether you’re in the right funds, the problem is more complicated than just the particular funds you own.

When paying a 3.5 percent sales load on your investments to compensate your financial adviser, you hope to get it right the first time. Switching into another mutual fund with another sales load can get expensive. You might want to discuss alternate ways of paying your adviser. The basics include: a commission-based model, an asset-under-management model or paying him by the hour, possibly combined with an annual retainer. A commission-based model, such as paying an upfront sales load, can work as long as you understand that’s how you’re paying for investment advice.

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