Wednesday, November 18, 2009

SOW: Brokers' Favorites? Funds That Pay Well

Secrets of the Wirehouse:

Surprise, Surprise - turns out that brokers like to sell mutual fund products that pay them more compensation...and these funds tend not to be any better than funds a person could pick randomly on their own.

Perhaps it’s worth it for more investors to read up on mutual funds and pick their own. The first of the two studies mentioned above found that fund buyers who avoid brokers tend to be a little richer and a little better educated than those who don’t, but not much. In other words, many fund buyers who pay brokers can probably do it themselves.

Scott Dauenhauer CFP, MSFP, AIF