Understanding Shareholders' Use of Information and Advisers (pdf)

E X E C U T I V ES U M M A R Y1. The majority of mutual fund shareholders use aprofessional financial adviser in making investmentdecisions. Almost three fifths of the survey participantshad consulted an adviser for investment advice (Figure 1).Respondents who had used a professional financial adviserusually met with that adviser four times per year andtypically followed his or her recommendations.2. Shareholders who use a professional financial adviserusually make the purchase decision, choosing a fundfrom among several recommended by the adviser.Seventy-four percent of respondents who had used anadviser described the relationship in this way. For 13 percentof respondents who had used an adviser, the advisermade all fund purchase decisions. For the remaining 13percent, the adviser solely placed the purchase orders of theshareholder (Figure 1).3. The typical mutual fund shareholder, regardless of hisor her use of an adviser, thoroughly investigates a fundbefore buying it. Before making their most recent purchaseof a stock or bond fund, shareholders typically reviewed13 separate items of information about the fund or itssponsoring company. Risk, return, the reputation of theFIGURE 1The Relationship with Professional Financial Advisers in the Mutual FundPurchase Process(percent of respondents)Use of a Professional Financial AdviserRelationship with Professional Adviser13Had notconsulted41 59Had consulted74Shareholder only directs adviser toplace fund purchase ordersShareholder selects fund from severalrecommended by an adviserShareholder effectively delegates allfund purchase decisions to an adviser13Number of respondents = 992 Number of respondents = 5643