Is Your Financial Adviser Acting in Your Best Interest?

Is Your Financial Adviser Acting in Your Best Interest?

Source:  The New York Times


This is a tale of two mutual funds with abysmal performance — but very different reactions from their investors to their returns.

The Ivy Asset Strategy — which is known as a total return fund, because it tries to maximize gains through a variety of investment strategies — ranked in the 99th percentile in 2016, according to Morningstar, meaning that investors could scarcely do worse.

The Waddell & Reed Asset Strategy, also a total return fund, ranked in the 97th percentile in the same class.


But last year, the Ivy fund lost 65 percent of its assets — meaning that investors pulled out — while the Waddell & Reed fund lost only 26 percent. Over the last three years, the Ivy fund has lost 82 percent, compared with 41 percent for the Waddell & Reed fund.

Given that both funds come from the same family — the Ivy fund is a product of Waddell & Reed, and they have the same portfolio managers — it might seem to be a curious question why one dysfunctional family member is being battered more than another.


The answer, however, is in plain sight, and of importance to investors: The Waddell & Reed version is sold by Waddell & Reed representatives to their financial advice clients. The Ivy fund can be bought by anyone — and those independent advisers seem to have told their clients to get out of it.

The discrepancy goes to the heart of the so-called fiduciary rule..... See full article.


This material is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation.