American Funds: the Poster Child for “Legal Abuse” in the Financial Industry

I've written recently about the perverted financial advisory industry in a post titled, “All You Need to Know About Your Financial Advisor,” and more extensively in the February issue of the Felder Report. I meet people on a very regular basis who have been working with bad advisors. Interestingly enough, nearly all of them own at least one mutual fund in the American family of funds.

American Funds, it turns out, is the poster child for all that is wrong with the industry. My twitter pal, @stockjockey, alerted me yesterday to this scathing piece over at “Tools for Money”:

We pick on financial advisors using American Funds because it's the most ubiquitous “legal abuse” in the business.

American Funds is the Paris Hilton of investing – it spends the most resources on self-promotion and is only famous for being famous. It really has no special talents to speak of relative to its peers. They were worthy of note back in the 20th century, but not anymore.

From the investor's point of view, there isn't anything American Funds has or does better than any other mutual fund family. So why are they so popular? It's not because of investment performance.

They're popular because they pay big money to be popular. The one thing American Funds excels in, is doing business the “American way.” Which is charging their shareholders high (semi-hidden) fees, and then spending their money on slick advertising, marketing schemes, and kickbacks to Broker Dealers and financial advisors…

Read the rest at Tools for Money.