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Improved Finra Fund Analyzer Lets Investors Assess Full Impact of Fees

By Rita Raagas De Ramos November 27, 2017

Finra has rolled out enhancements to its Fund Analyzer online tool that are expected to help investors and financial advisors compare the fees and discounts – if any – of more than 30,000 mutual funds, ETFs, ETF notes and money market funds, and assess their impact on their overall investments.

A live data feed available in the Fund Analyzer lets advisors sort through and compare investment products and run various investment scenarios. The enhanced tool also lets users calculate how a fund’s fees, expenses and discounts impact the value of a fund over time.

“The enhanced design allows investors to better determine which funds might meet their investing needs at the lowest cost while providing the best value,” Gerri Walsh, Finra’s senior vice president for investor education. “We have also added advanced features that allow the tool to model typical investor behaviors.”

The online tool's entire application was redesigned “so the user interface is all new and very powerful,” according to Finra.

The Fund Analyzer, which was originally introduced in 2005, lets users compare up to three funds at a time.

Because of the enhancements, Finra says the Fund Analyzer can now do the following:

  • show the impact wrap accounts or flat fees can have on overall costs and the future value of the funds
  • provide an “innovative display” of how a fund’s annual operating expenses compare to product and share class peers
  • let investors “accurately” model the impact of their annual contributions and withdrawals on their overall investments
  • show common discounts such as Rights of Accumulation and Letters of Intent, which can be modeled to create a more precise analysis for investors who take advantage of these discounts
  • analyze new and emerging share classes with variable and firm-specific fee scenarios
  • show fund-by-fund details regarding potential discounts funds may offer to investors
  • show data on a fund’s past performance, including the process behind Morningstar ratings and access to important fund documentation

Fund Analyzer has also been redesigned so it can be more easily used on mobile phones and tablets. Finra says in the coming months it plans to feature instructional videos to help investors better understand Fund Analyzer’s more advanced features and data analyses functions.

Citing a survey of 2,000 investors with non-retirement investment accounts – conducted in July 2015 but released in December 2016 – the Finra Investor Education Foundation says 74% of households surveyed owned individual stocks and 64% owned mutual funds.

Finra

Based on that survey, Walsh says stocks and mutual funds are the most commonly-held types of investments. The Fund Analyzer can thus help investors make more informed choices, especially in the case of relatively lesser-known investment products such as ETFs.

“None of us can control future fund performance, but we can control our costs. One percent difference in fees can add up to tens of thousands of dollars over 20 years,” Walsh says.

Fees are among the top considerations of this year’s batch of Financial Times Top 400 broker-dealers when deciding which funds to pick for their clients.

The average FT 400 advisor this year has 27 years of experience and manages $1.7 billion in client assets, up 14% from last year. The top three reasons cited by the FT 400 broker-dealers when choosing one fund over another are risk-adjusted returns (cited by 77% of the group), trust in the portfolio manager or investment team (cited by 54%) and low cost (cited by 39%).

The FT 400 broker-dealers have a minimum of 10 years of experience and at least $300 million under management, and were scored on six attributes: AUM, AUM growth rate, compliance record, experience, industry certifications and online accessibility.

The enhancements to the Fund Analyzer are in line with Finra’s aim of improving investor protection, a key priority that has been repeatedly stressed by its CEO, Robert Cook.