The post can be viewed on Investopedia here.

Question: 

Is a front load of 4.5 percent a normal percentage when purchasing mutual funds?

Answer: 

4.5% is not unusual for mutual funds, however I would never recommend buying a fund with such a high load charge. There are many mutual funds that have no load charges to choose from, or which have an option to waive the load under certain circumstances.

If your adviser suggests a mutual fund with a high front load charge, I recommend that you ask them the following two questions.1) How does the load charge on this mutual fund impact your compensation? 2) Wouldn’t it be in my best interest to invest in a mutual fund that does not charge a frontload percentage?

Advisers that recommend frontloaded mutual funds to their clients tend to be Registered Representatives (brokers) paid on commissions/transactions. Registered Representatives are not legally obligated to make recommendations they believe are in their client’s best interest. Registered Representatives are legally obligated to make recommendations which are suitable for their clients.

I recommend investors seek out Investment Advisers operating through an RIA (Registered Investment Advisory), because they are fiduciaries to their clients. As fiduciaries Investment Advisers are legally obligated to make recommendations they believe to be in their client’s best interest.

– Wyatt Swartz

– Contributions by Bryant Goacher

 – 6/4/2018