By Scott Ronalds
Account statements from most Canadian mutual fund companies are so bad that splashing a little colour on the document can propel you to the top of the list. Never mind features that clients are really interested in like performance and fees, just add a little yellow and green and it’s all good.
The latest study by Dalbar (a firm that evaluates companies based on the quality of service they deliver to clients) concluded that most fund companies are not meeting basic client expectations, notably in the area of performance reporting. In fact, the majority of companies evaluated in the study (22 statements in total were analyzed) did not even earn a ‘Dalbar designation’ because they scored less than 60 points out of a possible 100.
The study noted that the most important statement feature valued by investors is overall rate of return. Yet, according to Dalbar, "a disappointing 68% of mutual fund providers are omitting this crucial piece of information on their statements."
Fees are considered the second most important feature. Get ready for it…according to a recent article in Investment Executive, the study found that "the few mutual fund statements that do show fees present them in an unclear way."
Perhaps the most telling indictment of the state of affairs is that no firm received the highest designation ("excellent") and the top-scoring statement didn’t show rates of return. Further, according to the above-mentioned article, the highest ranking firm attributed their title to the use of colour – which they’ve been using "for about a year."