Financial planners rely mostly on fund companies and the Internet when deciding which funds are best for their clients, according to Investment Executive’s first Planners’ Report Card.
But although both provide an abundance of information, is it safe for financial planners to refer only to these sources?
Frank Bobyk, a 16-year industry veteran, says research is important, but it’s essential to know where the information comes from. Some reports and writeups are sponsored by a fund or manager, says Bobyk, branch manager at Regal Capital Planning Ltd. in Thunder Bay, Ont.
“The pitfall of being so involved with one company is that you can end up taking everything that the sales rep says as gospel,” he says. “The guys who come to talk to us are sales reps, what they are there to do is sell their funds, but there should be some other level of research above that to verify the information.”
Other levels include interactive sales software such as PALtrak and Globe HySales. All software packages allow the sales professional to get updates and client support.
Although the Internet came up as a key source for research, many said it takes up too much time. Ed Thompson, a financial planner at Money Concepts in Winnipeg, thinks the Internet is a reliable source for research, but he doesn’t use it too often. “It is much too time-consuming unless you know what you are looking for.” Our survey found www.globefund.com and online media sites for The Globe and Mail and The National Post were among the favourites.
For a more hands-on client interactive research session, planners recommend BellCharts. “I think BellCharts are an excellent way of sitting down with a client and taking them through a history of where a fund has been,” says John Trainor, a financial planner with TWC Financial Corp. in Armstrong, B.C. “If your client is interested in that fund, I believe that it is non-biased information that we can then use in the equation when making up a clients portfolio.” Beyond BellCharts, Trainor also recommends conferences and meetings. Since he works in a two-person office, he often feels isolated from what’s going on in the industry. “Talking with other planners is hugely beneficial. It is amazing the number of new ideas and different approaches you can pick up. Often it’s something you haven’t even thought of before.”
The Planners’ Report Card also indicates Investment Executive ranked among the top four most commonly used sources for research. A planner with TWC Financial in Ontario adamantly agrees. “I spend at least three hours a month reading Investment Executive. It is the most reliable and precise paper in the industry.”
Precision and reliability are important, but not as important as trusting the research, says Bobyk. “If we believe what the fund companies are saying and choose to go with them, then we have to put a lot of faith in the information that they have given us. We are trusting them with our image and our performance, which ultimately affects the client.”