Newspaper article THE JOURNAL RECORD

Demand Remains Strong for Mutual Fund Advice

Newspaper article THE JOURNAL RECORD

Demand Remains Strong for Mutual Fund Advice

Article excerpt

NEW YORK -- In an age when do-it-yourself money management gets easier all the time, investors in remarkable numbers still choose to buy and sell mutual funds through a professional adviser.

Last year, less than one-quarter of all new sales of shares in stock and bond funds took place directly from investors, according to the Investment Company Institute, the fund industry's main trade group.

The ICI says an estimated 77 percent of the $897 billion worth of new fund shares was sold through brokers, financial and investment planners, banks, insurance agents, employer-sponsored 401(k) plans and other intermediaries. These numbers come from an organization known for staying strictly impartial in the perennial load-funds- vs.- no-loads debate. Most of these middlemen get paid to advise investors. In a 401(k) plan, there is often no individual advice provided, but the employer still typically chooses a menu of funds in which individual members can invest. People who are inclined to pick funds on their own have more ways to proceed than ever before, thanks to innovations like the Internet, and the supply of information about funds keeps growing at a rapid rate. But many investors apparently have responded to the information explosion by seeking professional help in sorting it out. That's fine. But if you are going to be paying a chunk of your nest egg to somebody else, whether in the form of commissions or advisory fees, it's essential to have some idea of what you should rightly expect for your money and what you should not expect. Sometimes, people look to advisers to pick winners for them by putting their money in the hottest, most successful funds. The problem with thinking this way is that you can't buy last year's performance with today's money, and nobody knows which fund is going to get the best results in tomorrow's market. If you want to put your money in the funds that earn the best ratings from advisory services, or led the performance derby last year, go to your local library and look them up yourself. …

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