Mutual fund investors need advice

More than half of Canadians who own mutual funds agree choosing the right fund is neither simple nor straightforward, yet most spend more time planning luxuries instead of annual investments, reports ING DIRECT.

On average, 3.4 hours a year are spent planning mutual fund investments, compared to a major technology purchase such as a smartphone, television or computer (5 hours), a vacation (6.6 hours) or a car/lease (9.2 hours).

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“Mutual funds are the most popular investments in retirement portfolios, so to spend a little more time researching your options is worthwhile,” says Silvio Stroescu, head of mutual funds at ING DIRECT.

Some admit factors like not having enough time to learn (15%), or having too many choices (14%) are among the obstacles they face.

Also, investors still don’t know the basic cost of holding their funds. Half say they felt a MER of 1% or less was fair, yet 50% are unsure of the annual management expense they’re paying.

Read: Firm to pay millions for mispriced mutual fund orders

What’s clear is investors could use some additional information.

A majority (73%) of mutual fund investors turn to a banker or advisor when looking for advice. Others turn to family (7%), media (3%) or friends (2%), and 1 in 10 don’t seek advice from anyone.

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“The perceived complexity around finding the right mutual funds often means Canadians are leaving their investment choices to other people,” says Stroescu.

He adds, “Outsourcing investment decisions is the main reason why Canadians pay some of the highest mutual funds fees in the world. Rather than delegating these decisions, consider investing directly in a total portfolio solution that takes the guesswork out of investing while saving you both money and time.”

Here are some articles to help:

How to handle other people’s money

How to frame fees

How to tell clients they’re too small

Set-and-forget investments

Why mutual funds are buying ETFs