Why your advisor puts your money in Mutual Funds

I came across an article last week where a friend of mine was discussing how advising companies like to put your money in mutual funds.

The Mutual Fund companies have a cost-sharing agreement with the broker/dealers where they will actually pay for space on the shelves of the investment company. This is similar to where Count Chocula appears on the shelf in the grocery store so your kids will ask their parents to by the sugar-laden cereal they can see at THEIR eye level.

If you pay close attention, the cereal with the most nutrition is usually on an upper shelf, where Post and Kellogg hope you don’t look. It's an age-old marketing strategy that has been employed for 50+ years. This same technique is used by today's mutual fund companies. Advisors and their B/D's use well known companies (American Funds), then share in the profits. The profits come from your returns.

Next week, I will further explain why the Mutual Fund companies don’t go to cash in a down market. It’s always the same advice: stay in the market for the long term and you will be fine. What if you need the money NOW!!! Also, does managed money outperform a basket of Mutual Funds? Tune in next week and find out.

For more videos and insider secrets, go to our site at www.enspheremg.com or contact Chris directly.

 

Mike Giffin, Ensphere Marketing Group