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Portfolio > Mutual Funds

Phoenix Report Shows Channel Distinctions

By Janet Levaux

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There’s no question that financial advisors follow mutual fund and exchange-traded fund companies very closely, and it’s an equal certainty that among those fund firms, advisors have their favorite mutual fund and ETF brands.

Predictably, when it comes to naming names, advisors pick all the big companies—the PIMCOs and the iShares of the fund world—as their favorites, recent survey results from Phoenix Marketing International show.

Phoenix conducted its online survey in November among 968 advisors who recommend securities, retirement services and insurance products to their clients.

A closer look at the survey, however, discloses some fascinating patterns. The differences are in the details—especially when the results are broken down according to the type of firm where survey respondents work.

For example, advisors who work for a registered investment advisor (RIA) pick low-cost, venerated Vanguard as their hands-down favorite, while advisors employed at a regional broker-dealer choose high-load, disciplined American Funds as their company of choice.

“My gut reaction when I saw the survey results was that the underlying funds used probably had to do with fee structures,” said Terrance Reilly, who serves in the investment management practice of the Philadelphia law firm Montgomery, McCracken, Walker & Rhoads and advises mutual funds, investment advisors and hedge funds regarding the Investment Company Act of 1940 and the Investment Advisers Act of 1940.

“Registered investment advisors are used to charging management fees, so they’re willing to put clients in a fund on a no-load basis, as opposed to the full-service [wirehouse] firms, which charge a more traditional commission-based fee structure,” explained Reilly.

John Sullivan and Joyce Hanson contributed to this report.

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