Are Financial Advisers Likely to Recommend Mutual Funds?


Quick Answer

Financial advisers are likely to recommend mutual stocks because of ease of diversity, reduced risk and ease of comparison, and they are solid choices for advisers of any experience level, according to Investopedia. Financial advisers are often better advised on mutual funds than they are on other securities or funds.

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Full Answer

Mutual funds are a primary source of diversification and are often less expensive for investors, notes Investopedia. A single fund may contain more than a hundred stocks, and it's easier and less expensive to buy those stocks together in a fund rather than individually. The diversification of mutual stocks benefits both advisers and investors.

Advisers perceive mutual funds as less of a risk because they are more familiar with them than they are with other investment products, according to Investopedia. Because investors know more about mutual funds than other types of investments, they are more likely to ask for them, making it sensible for advisers to know as much as possible about mutual funds.

Common investment comparison elements include past performance, cost of opportunity, total return and volatility, notes Investopedia. Mutual funds often aren't as troublesome to compare as other investment vehicles, and it takes a short time for advisers to choose the best ones.

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