The financial sector that has the most contact with the investing public–the mutual fund industry–has largely evaded pressures to reform.
This is a serious omission since the $3 trillion mutual fund industry plays a critical role in determining the financial well-being of millions of Americans. The industry’s problems, range from conflicts of interest to lack of transparency, hidden fees and expenses and how they severely affect retirement planning. The net impact of these anti-customer business practices impair the ability of millions of Americans to build a secure financial future.
As a result of the Lost Decade of investment returns, it’s time for fund companies to adopt a new customer-centric business approach. They have to decide whether their primary beneficiaries are their wholesaler sales forces or their shareholders. They cannot serve both.
Why Fund Reform Matters to Investors
Fund reform matters because high fees, in the form of the fund’s expense ratio, are often more important than the fund’s return. When fees are recurring, they have a negative compound effect. This means shareholders lose more money as time goes by.
We also believe that in an era of low returns, investment professionals should adopt the fiduciary standard and practice transparency. Both of these are the foundations for good marketing.
For individual investors, this site believes that educated investors get better returns.
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