Mutual Fund Training Leads to Successful Investing

Mutual funds are one of the most common investment options that investors choose. They provide investors with a safe investment of diversification and balanced risk. Prior to purchasing a mutual fund, one must consider the associated costs. The vast majority of fund investors are preoccupied with the fund performance. While performance is an important factor, it is also important that investors pay attention to charges and fees. Mutual fund training will provide future investors with tips and tools they need to make the best investment decisions.

The costs of owning a fund are called the expense ratio. This is a separate entity from the buying costs. Expense ratio characterizes the percentage of the fund's assets that go directly toward running the fund. Fees include the investment advisory fee, the administrative costs, distribution fees, and other operating expenses. These fees are compiled into one lump sum so that the investor will not have to make calculations or make separate payments for each of them. Over the years, these expense ratios have been steadily increasing, so it is very likely that owning an actively managed mutual fund will become more expensive.

According to the web site, KaChing, actual mutual fund expenses for stock funds average 3.4% a year, not the 1.2% figure quoted by the Investment Company Institute, which is a mutual fund trade group. KaChing's figure is substantially higher because it includes elements like trading commissions (0.2%) and the investor's tax liability (0.94%). ICI uses figures that weight each fund by the amount of assets it manages; KaChing treats each fund equally. Since expenses can seem complex to the average investor, it is important to seek the service of an accredited financial broker. In choosing an advisor, or becoming one yourself, it is important to make sure that they are certified in mutual funds. A mutual fund certificate shows clients and prospects that the broker or advisor has gone through a comprehensive program offered by a mutual fund school.

Mutual fund training teaches the broker ways to deal with any question or concern raised. For example, a prospective investor may come in for a meeting with the advisor and say that he wants to buy a fund which he read about in the finance section of the newspaper. Although the fund is "hyped up" as the hot buy in the market, advisors know better than to just jump headfirst into the buying process. Clients are often unaware of the risk levels and additional costs associated with these funds. Although they may say that risk and costs do not bother them, investing should be considered a serious decision.

A mutual fund certificate is more than just a credential; it shows a specialization that few have obtained. Certified advisors show a commitment to proven method of portfolio construction that is built on risk-adjusted returns. Through providing all the necessary precautions, such as fees that come along with buying mutual funds, the client will build a trusted relationship with his or her advisor. For the financial advisor, a mutual fund certificate is a key piece of business development that leads to more clients and an informed understanding of the practice. For the clients, certification ensures them that their financial investments are safe and being securely managed.


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Cory Bowman is Director of Ops at the Institute of Business Finance. IBF has helped thousands of members of the financial services industry attain designations. For more information about mutual fund training, mutual fund certificate, visit www.icfs.com