The No. 1 Way Advisors Pick Funds

“Fund managers that can clearly and concisely articulate their investment philosophy and strategy are more likely to garner interest from advisors and attract assets,” says Mickey Janvier, head of Wealth Management Americas for Aberdeen Asset Management.

A just-released RIA study by Aberdeen found that 59% of the 201 advisors that Aberdeen polled at the recent Charles Schwab IMPACT conference named clarity on the fund manager’s investment philosophy and strategy as the most important attribute to consider when recommending a mutual fund to a client.

Two-thirds (67%) of advisors surveyed agreed that investment products have become increasingly difficult for clients to understand, compared with 33% that did not believe investment products have shown an increase in complexity.

“Simple, open and honest communication from the fund manager is of utmost importance to advisors when determining which funds to invest in on behalf of clients,” said Janvier, in a statement. “While this seems simple in theory, many fund managers continue to undervalue the importance of clear and concise communication with advisors about how portfolios are invested. These managers will have a difficult time remaining relevant in an environment where transparency is king.”

Of less importance to advisors in recommending a fund were historical returns (19%), fund rankings (10%), fund manager tenure (8%) and brand name (3%).

However, the majority of advisors (67%) also agreed that these new, more complex and sophisticated products generally offer valuable benefits that can help clients achieve their investment objectives.