OK, so this post is a little self-serving, since I do not use any mutual funds for my clients. But still, I thought it was both amusing and telling.
Here's an excerpt from the article:
Finding 1: 71% of the High Net Worth investors polled think ETFs preserve capital better than mutual funds did, and 70% think ETFs provide a “significantly better” rate of return than mutual funds.
Finding 2: Only 27% reported that their advisor, broker or financial planner has recommended they buy an ETF; 75% said mutual funds make up a large part of their portfolio compared to just 12% that even had any ETFs in their portfolio.
“Unfortunate” has nothing to do with it
In a press release issued on these findings, iShares Canada head Heather Pelant was overly polite:
The track record speaks for itself: Investors are enthusiastic about ETFs and consider them a good investment. Yet it’s unfortunate that such a small number of advisors recommend these products given the positive feedback we received from investors.
Pelant doesn’t spell it out in the press release but this blog’s headline tells you all you need to know about why this is the case: Advisor Comp [Compensation.] Virtually all mutual funds sold in this country pay advisors hefty trailing commissions: usually 1% on front-load funds, or 0.5% on funds sold through the Deferred Sales Charge (DSC) model. DSC funds also usually provide an upfront commission of about 5%.
One place mutual funds have ETFs beat: advisor compensation | Wealthy Boomer | Financial Post
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