Q.   Recently, my grandmother, who is 102, asked me to look at her investments. She just didn't think they were doing as well as she thought they could be. She was also paying a lot of fees. Right now, she has her investments in four different accounts with a major brokerage firm. The accounts total about $560,000.

This is her only income source other than Social Security of about $500 a month. She is paying managers about $400 per quarter for each account. She is also paying her financial advisor at the brokerage firm a fee of about $3,000. In addition, her taxes are several pages long, due to all the buying and selling within her accounts. Is there something more suitable for her to be investing in?

---B.H., by email from Dallas


A. This isn't enough information to know what's really going on here. If the fees are as you state, her investment management costs are running about $9,400 a year--- $6,400 for the four managers and $3,000 for her account manager. That's "only" 1.7 percent of her $560,000 account value. That's low for typical brokerage "wrap" accounts.

So I suggest that you do some information gathering. First, check her statements and try to get a good measure of what her advisory costs are as a percentage of assets managed. Second, if she doesn't have a "wrap" account, which eliminates brokerage commissions, check the impact of commission costs.

Third, get the account representative to provide a statement of annualized return on the account and to compare it to a comparable category of mutual fund, e.g., moderate or conservative allocation, as Morningstar now characterizes balanced funds. If it is an expensive account that manages to provide a return in the top 25 percent of comparable managed funds, both you and your grandmother should feel differently than if it provides a return in the bottom 25 percent of comparable managed funds.

Don't accept any doubletalk in getting such benchmarked figures. Responsible advisors regularly measure performance.


Q. I am a fairly young investor (35) just trying to get started with a financial planner. Instead of mutual funds, he recommended Unit Investment Trusts. I don't hear or read about them very much, so I was surprised at his selection instead of a true mutual fund. Are the UIT front-end and back-end loads similar to funds, or do they vary? What about monthly fees or expenses?

Would I be better off with a UIT, a mutual fund, or a handful of individual stocks? Is there cause for concern here? If you were 35, aggressive, and ready to go with $40,000, would you go with UITs, Mutual funds, or something else?

---T.G., by email from Dallas


A. Be wary. Unit Investment Trusts generally make more sense for the marketer than they do for the investor. They are also a relatively small part of the investment landscape. According to the Investment Company Institute, for instance, total investment in some 6,485 UITs at the end of 2004 was $36.8 billion. New investments in January were just over $3 billion. To put this in perspective, there are 16 individual mutual funds that have more assets than the entire UIT market.

While UITs often have minimal operating expenses, they carry substantial front-end commissions. They also present a significant problem if you want to sell before maturity--- the most common market maker is the brokerage firm that issued the original UIT. As a consequence, the bid/ask spread can be uncomfortably large.

In other words, you can get skinned going in and going out.

You shouldn't be surprised at this. A 6 percent commission on a $40,000 investment is only $2,400. Usually, less than half of it will go to the salesperson.

In your shoes, I'd eliminate both UITs and individual stocks. I'd invest in no more than four mutual funds--- no-load funds,   preferably index funds.   If you are inclined, you can add more funds later.

If you don't feel confident to make your own decisions, find a broker happy to sell funds from the American Funds group. You'll pay a 5 percent commission on a $40,000 purchase, but you'll get low-expense, low-turnover funds with good management.