Choosing a Mutual Fund Advisor: Part One

Choosing a Mutual Fund Advisor: Part One

If you have decided that you prefer to spend your time on other things than sifting through thousands of mutual funds, then it’s time to look for a mutual fund advisor. There are many things to consider before choosing a mutual fund advisor. In this segment, we’ll take a look at the fancy letter and titles that you will run across when searching for an advisor.

Alphabet Soup and the Mutual Fund Advisor

When you are looking for a mutual fund advisor, inevitably you will run across fancy letters after the mutual fund advisors’ names.

The letters are professional designations that are earned by the mutual fund advisor.
There’s the CFP®, ChFC and the CFA. There’s the CMFC, CFS, CIC, and the CIMA. There’s the, well you get the picture. What do all of these letters have anything in common besides starting with the letter C?

In many cases, professional designations show a commitment to education by the mutual fund advisor. There are several highly regarded designations in which the advisor must meet requirements such as industry experience, educational coursework, ethics guidelines, and a rigorous exam. In some cases, a designation simply shows a commitment to marketing by the advisor. The advisor merely takes a simple exam (sometimes with an open book) and pays an annual fee to the organization who crafted the marks.

The moral of the story is that an advisor who has a professional designation is not necessarily more qualified than an advisor who has letters after his/her name. Get to know the mutual fund advisor, ask for references and do your homework on the designation, prior to signing up with the advisor.

Prestigious Titles and the Mutual Fund Advisor

How about the prestigious titles of the mutual fund advisors? Senior vice president, managing director and wealth management guru are a few popular titles (replace guru with advisor, consultant, specialist, etc.). On the face of it, these titles seem to denote success in the investment management industry. Don’t be fooled.

Many large banks and brokerage firms hand out titles based on what the advisor does for the organization, not the investor. In many cases, advisors earn a fancy title if they sell a lot of products. There’s not necessarily a positive relationship between selling products and delivering excellent service to clients.

Resources to Help Find a Mutual Fund Advisor

Whatever the designation and the title, do your homework on the advisor. A couple of helpful sites that will shed light on each advisor’s background: