Taking a 360-Degree View Of Investors' Net Worths
November 3, 2008
With the stock market down 40% in the past year, many investors are reassessing their investments. Many, in fact, are bailing out of equity mutual funds, vowing never to return.
With so many of the industry's customers shellshocked, now is the perfect time for mutual fund companies to take a hard look at their product offerings and customer service, too.
We've said it before, that fund companies need to take a holistic view of their customers' retirement needs, starting with providing information about quality of life in one's senior years, inclusive of providing for healthcare.
But as is evidenced by the continuing decline in real estate values, job losses and the incredible volatility in the stock market, fund companies' responsibility to their customers needs to go even further. The standard mantras of "invest for the long term" and "equities reward risk" are meaningless to investors who have lost half of the value of their retirement savings.
The mutual fund companies that are going to emerge the strongest in this period of financial turmoil are those that offer alternatives to the stock markets, particularly in underutilized pockets of fixed income, in inflation-protected investments, in international markets and in dividend-paying funds and annuities. Target-date funds are one of the industry's biggest sellers. These funds should expand their horizons into a broader array of asset allocations.
Most importantly, fund companies need to partner, now more than ever, with financial professional sales partners who are willing to work with investors on every detail of their portfolio, inclusive of their debts, their home equity, their obligations to their children's education and to other family members, and sound tax planning.
As instruments onto themselves, mutual funds charge relatively low fees for professional management of pooled money. This formula works for the product. But for the investor, mutual funds need to expand their outlook and concentrate on personal attention.
In the race to capture Baby Boomers' rollovers, banks are already laying the groundwork to do this by expanding their wealth management divisions. Fund companies must be one step ahead of them, fully equipped to help customers with comprehensive, highly diversified retirement plans that can weather any storm.
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