'Memo to Fund Executives: Get Out from Behind Closed Doors'

September 2002
Journal of Financial Planning;Sep2002, Vol. 15 Issue 9, p16
Academic Journal
This article presents an interview with Don Phillips, managing director of Morningstar. According to Philips, the reaction of financial advisors on the new star rating has been very positive, mainly because the new system is more in line with the way advisors and clients are thinking about and selecting funds, and about how to create a good portfolio. Under the old rating system, there was probably too much of a headwind and tailwind effect--funds received too much, or too little. With regards to the movement of the financial planning market, Philips believes the industry will look back and see how this is one of those times that planners and advisors are adding great value to their clients--helping them keep perspective. The bigger problem is those who jump overboard now. They're going to do irreparable damage to their long-term goals. According to Philips, mutual funds haven't served investors as well as they might have, but investors play a role in that, too. A disproportionate amount of investors' assets that went into funds in 1999 went into large growth funds.


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