Financial advisers fail to help investors improve their returns in mutual funds, according to a new academic report, The Toronto Star reports. The research, head by Peter Tufano, a senior associate dean at Harvard Business School, is based on analysis of the returns in 4,541 mutual funds that investors purchased between 1996 and 2002. As of 2002, two-thirds of the $3.8 trillion in assets held in those funds were purchased through a professional broker or adviser.

The researchers found that investors who had worked with an adviser or broker held a disproportionate amount of their portfolios in low-return money market mutual funds; funds with higher fees, including upfront charges, than if purchased directly; and trendy funds with recent strong performance. In fact, they found that the equity funds sold by brokers delivered average performance of 2.9%, compared to direct-sold equity funds' performance of 6.63%.

What advisers did bring to the table, however, the researchers conceded, was the ability to steer clients to funds that an amateur could not easily find, to encourage them to increase their savings, to invest for the long term and try to achieve higher returns.

"When it comes to mutual fund investing, this study implies that financial advisers add no value," according to the report. "The prominence of funds sold through brokers implies that brokers provide consumers with valued services. Our study identified few, if any, of these benefits."

The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.

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