Here is another article on First Command from FundAlarm. It looks like people are taking notice.
Here are some facts:
The Fidelity Destiny funds come with a 50% front-end load;
There's an outfit called First Command that sells these funds in large numbers;
There are many less expensive ways to invest in mutual funds.
Unfortunately, when you publish these facts in a national magazine, the above-mentioned First Command goes ballistic, and tries to trash the integrity, intelligence, and professionalism of the writer.....What's all the fuss about?.....Steven Goldberg is the writer, and his article -- "All Loaded Up" -- appeared in the September 2003 issue of Kiplinger's magazine.....Goldberg's article is a fairly mild expose of First Command, which is probably the world's biggest seller of mutual funds with huge front-end loads, also called "systematic" or "contractual" plan funds (companies other than Fidelity offer such funds, including AIM, Franklin Templeton and Pioneer).....The story gets a bit more complicated, and a lot more emotional, because First Command (formerly USPA) targets and sells these contractual funds almost exclusively to members of the U.S. armed forces......Goldberg's article suggests that First Command oversells these funds to unsophisticated military personnel, it points out that the 50% front-end load creates a deep financial hole for investors, and it suggests that an automatic-purchase program (via bank draft) would be a simple and sensible alternative to these monster-load funds.....Here's part of First Command's response to Goldberg's article, from a lengthy rebuttal that now appears on the company's Web site:
Mr. Goldberg is biased against First Command-recommended systematic mutual funds as a tool for helping military families achieve their long-term financial goals.
Mr. Goldberg has a history of being accused of unfairly and inaccurately attacking legitimate businesses in print.
Mr. Goldberg does not understand systematic investing and its role in helping professional military families achieve their long-term financial goals.
If you read First Command's entire response, you understand the real reason why their skivvies are in such a bunch: First Command spent a lot of time with Goldberg spinning its story, and Goldberg didn't write the article that First Command wanted.....First Command wanted Goldberg to think like a company salesperson (50% front-end load creates commitment, commitment creates discipline, discipline leads to financial goals), while Goldberg insisted on thinking for himself.....Here are the facts the way we see them: First Command is a money machine that has appointed itself the financial savior of America's military families.....First Command may be squeaky-clean with the regulators, but the very nature of its business (commission sales) prevents the company from telling its customers the whole story, which is this: Using no-load funds, there are sensible, disciplined, ways for military personnel to get exactly the same results as First Command, at a tiny fraction of the cost (even funds with traditional loads would be better than what First Command is selling).....If you're a company that really cares about our men and women in the armed forces, you tell them the whole investment story, and not just the part that earns you a 50% sales commission.....First Command doesn't tell our military personnel about no-load funds and automatic payment plans (or, presumably, the military's own Thrift Savings Plan) because First Command has no economic interest in doing so.....There's nothing inherently wrong with what First Command is doing, but it's also nothing to be proud of.....In fact, if it were us, we'd be downright ashamed.....Ultimately, First Command is defending a fat pile of cash, and Steven Goldberg isn't.....If you were in the military, who would you trust?