Sales Practices
Chapters in this video
- 0:00 Breakpoints as bulk discounts and the Class A trap
- 0:58 Breakpoint selling and selling dividends violations
- 2:43 Letter of intent: 13 months, backdating, and escrow
- 4:08 Rights of accumulation and fund family rules
- 5:17 Dollar-cost averaging: average cost vs. average price
- 6:56 Rapid-fire exam recap
What this video covers
- Why only Class A shares offer breakpoint discounts, and why Class B and Class C shares never do
- What breakpoint selling is, why Riley the Rep must disclose the $50,000 breakpoint to Carla at $48,000, and why selling dividends before the ex-dividend date is prohibited
- How a letter of intent (LOI) works: the 13-month commitment, 90-day backdating, escrowed shares, and why it is non-binding even when the investor falls short
- How rights of accumulation (ROA) use current market value (not original cost) across accounts in the same fund family, including householding rules
- The exact dollar-cost averaging (DCA) calculation: why average cost per share is lower than average price per share, and why DCA never guarantees profit
- How LOI and ROA differ in direction (forward-looking promise vs. backward-looking portfolio value) and mechanics (escrow required vs. no escrow)
- Why $1,000,000 is the magic number where many funds eliminate the front-end sales load entirely
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