[SSLance]

I'm not posting this to agree or disagree with anything said above, but in regards to loads and funds...some investment houses have vehicles to get around those.

At Merrill Lynch for example, you can buy into a fund that may or may not have a front load and not pay any of the load as long as you hold it for at least a year. I believe they get around this because Merrill will buy X amount of those shares from the fund and then buy or sell them to their clients after. They probably also get a break on the load from the funds themselves for being such a large player.

Now, regarding the types of investment accounts you can have at Merrill. You can be in a non-managed account, without any fees...but you will pay a high commission on equity stock trades. You can buy into most funds inside these accounts though...without paying a load if you hold it for at least a year. I don't remember the last time I paid any sort of commission or load on a mutual fund in my Merrill accounts.

Or...you can be in a managed type account where you do pay a fee every quarter based on the value of your total account...get free trades and free buys or sells of mutual funds with no loads. I think the last managed account plan I was in had a 1.5% yearly fee. Your Financial Advisor will completely manage your account for you or you can be very active in the buy\sell decisions in this type of account...your call. Typically in this scenario you don't get a FA that runs you in and out of equities all the time because he doesn't get paid on the trades made, he gets paid more from your account the larger he makes the account grow.

If you were going to have your portfolio totally self directed, Greg's example of a discount investment account at Schwab and buying the equities directly that most funds hold large stakes in is the most efficient way to do this...but you have to remember to be in total control of all of the buy\sell decisions and stay on top of it. It isn't a set it and forget vehicle.

If you wanted to let the money managers do what they do and participate in funds instead, an investment account at a larger house can be efficient in this manner if you can get around the loads as described above and not pay fees on the value of the account. Keep in mind though that the money managers running the funds do need to get paid and this happens from the expenses that come right off the top of the funds before any gains or losses trickle down to the fund holders. Some funds are better about this than others, research is again key.

I have had the opportunity in the last 7-8 years to watch some very high end Financial Advisors...and the different strategies they take. One in particular that is becoming somewhat of a regular appearer on WSJ, Fox Business News etc. It is amazing to me that he isn't much of a stock picker at all. About 90% of his portfolios are built around index funds. He tax harvests regularly, re-adjusts portfolios based on asset class, and buys and holds while reinvesting dividends much like what is talked about here...but all in pretty much Index ETF types of funds. It is interesting to watch and he has done very well over the years, even after the 2% a year he charges his clients.