Financial Consultants Wake Up!

At year-end 1999, 49% of all open-end mutual funds were of the no-load variety. As of year-end 2006, that percentage had risen to 60%! While professional wrap fees of no-load funds surely account for some of it, this staggering number should get the attention of every financial consultant and the firms they represent.

Why would so many investors, understanding the critical role a quality investment portfolio plays in their financial future, feel capable of doing their own investing? After all, they do not perform their own heart bypass surgery. I believe that as long as investment professionals tout past performance as the main element in fund selection, an increasing number of investors will feel capable of doing their own investing. As long as the industry promotes a buy-and-hold strategy, investors will decide they have the necessary time to devote to managing their investment portfolio. After all, how long does it take to buy them and put them away for safe keeping?

Of course, the bear market of 2000-2002 did not help the cause of the financial professional. Many clients lost significant amounts of money during those many months. Certainly, many of them probably felt they could lose that much money all by themselves, and save the professional expense.

Until financial consultants and their firms convince clients and prospects that a successful investment portfolio does not involve a buy-and-hold strategy of past performance-selected funds, this trend will continue. Professional investment advisors must convince investors that a successful investment portfolio requires ongoing, active management, which includes a constant exam of buying and selling opportunities. They must also convince investors that past fund performance has little, if anything, to do with the fund selection process. Successful fund selection consists of a sophisticated set of professional criteria and benchmarks, the least of which is past performance.

Only if this metamorphosis takes place will the trend toward no-load investing reverse itself. Maybe then, do-it-yourself investing will sound as ridiculous as do-it-yourself heart bypass surgery!

This website is dedicated to showing you how to both present and prove this concept.