John R: “Thanks for the Mutual Fund Cost Calculator. After some personal consideration and also checking with your ‘dump this fund’ section, I called my broker at Paine Webber asking him to close one of my mutual funds and send me the money. Of course he wanted to know why, what did I plan to do instead, etc., etc. I told him to look up the alternative fund I am considering. (I am dumping Putnam Fund for Growth and Income in favor of Vanguard’s Tax Managed Fund.)

“He is suggesting that he could close my current fund and transfer that money to open the new one that I would like to get. In other words, keeping him in the loop. It seems simple enough that I could do it myself. Why would he want to keep my measly account this way if I now will invest in a no-load, low tax, low fee mutual fund? Would there be any fees going to him or Paine Webber for this service?”

Hope the switch serves you well over the years, John. It sure looks as if you would have been better off if Paine Webber had recommended a lower-cost fund in the first place — your fund did less than half as well last year as the four low-cost funds our calculator compares it with. But selling you the low-cost funds, Paine Webber wouldn’t have made nearly as much money.

As to your broker’s interest in staying in the loop, brokers believe the game in the future is “controlling assets.” They want to keep yours under their roof — if only to lend you money against them one day.


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