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Fiduciary Shares VS Class A or Class C in AMERICAN FUNDS

By Terry Savage on July 17, 2021 | Investments

My tax advisor/CPA has proposed moving my two American Fund accounts (one IRA and one Joint Investment), which are a mix of Class A and Class C shares over to him to manage as Ficuciary2 Funds to save money in fees. Any recommendations as to whether this is a good idea?

Terry Says

This is a tricky one. You’ve already paid up-front fees on the A=shares, and will pay exit fees on the C shares.
Read this article about the new “fiduciary shares” — designed for investment advisors who do not charge commissions on buying and selling. It’s a good idea.
BUT, you need to ask him/her to do a comparison of the ANNUAL costs on the new fiduciary fund vs the ongoing annual costs on your existing funds.
Then ask if when you do the transfer you have to pay an “exit fee” on the C shares.
Only by knowing both the ongoing costs and the fees to et out of the other funds, will you be able to do a comparison. And your advisor should easily be able to do that for you.
Just don’t forget to add in to the ongoing costs your advisor’s annual management fees!! Then the comparison is complete!

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