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I have a hard time seeing it as unintended. If you are not promising any differentiation between yourself and the index than the only thing to really compete on
by sseveran 8y ago
I have a hard time seeing it as unintended. If you are not promising any differentiation between yourself and the index than the only thing to really compete on is cost. There are economies of scale in finance, specifically if you need to optimize solely for AUM.
- davio 8y agoThere's definitely a race to the bottom going on with the free Fidelity funds and Vanguard reducing the dollar minimum by 70% for a lot of admiral shares.
- barrow-rider 8y agoVanguard is doing "Auto" Admiral too -- if you meet the 3k minimums for Admiral funds they're auto converting you anyway. Race to the bottom or not, competition works.
- refurb 8y agoYet another great example of "race to the bottom" benefiting consumers. Not sure why it's used in a negative way all the time.
- pmiller2 8y agoIt's used in a negative way all the time because the people using it are usually on the losing end of the deal.
- thisisit 8y agoBecause eventually businesses wake up to the fact that they need to make money. And they do it by going the absurd route. For example, online help is free but if you need to talk to a human being support, give us $10 a call or something. And while an average consumer might not be affected, people who are actually affected end up a nightmarish situation.
- refurb 8y agoBut that's just running a business poorly and you'll likely lose customers over it.