News | 10.07.19
Wall Street Brokers Missed the Index-Funds Memo
Brokers at four of the largest Wall Street firms have just 29 percent of their clients' managed fund assets in passive index funds, well below the 45 percent passive rate for independent investment advisors, according to a recent report by Cerulli Associates. The gap is even wider for regional and independent brokerage firms. By comparison, passive funds account for about 40 percent of all mutual and exchange-traded fund assets. Experts say the difference can be explained partly by Wall Street's historical sales culture, with brokers wanting to show clients their skill in picking money managers. In addition, there's the fact that some brokers and their firms can still get paid more in commissions and other compensation with active funds than passive ones.
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