These two spirited e-mail messages, typical of nearly 100 I've received on the subject, came one right after the other.
"I took exception to your recent putdown of load mutual funds," wrote a financial adviser who sells both load and no-load funds - that is, funds that charge a sales commission when you buy or sell, and funds that don't.
"All the financial columnists I've ever read advocate no-load mutual funds," the adviser said. "The one thing that continually irks me is that you collectively think anyone can manage a stock or mutual fund portfolio and should choose no-load funds.
"The fact that financial columnists and television/radio hosts receive so many questions about investing and mutual funds should be proof of what I deal with every day: People have no clue about this subject and therefore need help. To tell your readership that they are better off going it alone is irresponsible."
Now from another adviser:
"I wanted to commend you for your article. You told it like it is without mincing words. I don't think people understand why their 'planner' recommends load funds. As a fee-only planner, I am glad to see when a journalist talks about advisers who aren't compensated by mutual fund loads."
From these e-mail messages and many more like them, two things are clear. First, the load versus no-load funds debate is as intense among financial advisers as it supposedly is between journalists and people who sell load funds. And second, my position appears to be misunderstood.
I have never advocated that everybody put together a portfolio of no-load mutual funds on their own, although some readers are capable of doing so. But, as I've said before, from the thousands of questions I've received from readers in the 15 years of writing this column and from all the independent research I've seen on investor performance, I am convinced most people simply don't have the knowledge, interest or discipline to go at it alone, and would be better off with a financial adviser.
But to borrow one of the advisers' words, the one thing that continually irks me is a compensation system that pushes many advisers to recommend only load mutual funds. To me, that's like going to a doctor who only prescribes medications that kick back a portion of the purchase price.
Many advisers, particularly those affiliated with certain brokerages or broker dealers, are allowed to recommend only from a list of "approved" or "recommended" load funds. Or, while not required to do so, they may have financial incentives to recommend only these funds.
That does not necessarily mean the recommended funds are bad or that the investor would do better off alone. It does mean investors can't be sure they are getting the best and most objective advice, because no-load funds are excluded from consideration.
In some cases - this irks me even more - the adviser does not even tell the investor there are such things as no-load funds.
In the ideal world, the investor would pay the adviser for the advice, period, and the adviser would recommend any investment based only on what is the best for the client. Unfortunately, such arrangements are still relatively rare, although organizations such as the Garrett Planning Network (www.garrettplanningnetwork.com) have financial planner members who follow the practice.
Members of a larger organization, the National Association of Personal Financial Advisers (www.napfa.com), have pledged not to receive compensation from third-party sources - such as a load mutual fund - that is contingent on the client's purchase or sale of a financial product. Therefore, these so-called fee-only planners have no financial incentive to recommend one fund over another.
Many fee-only planners, however, can be more expensive than those who sell load funds because their fees are often based on the size of your account. (If the fee is 1 percent, you would pay $1,000 a year on a $100,000 portfolio.) Advisers who let clients choose the method of compensation (fee or commission) say many clients prefer a one-time load or commission to a continuing fee.
"If the adviser can help the investor obtain a slightly higher return than that investor would on his own, the adviser is probably worth the fee or commission," another adviser wrote, and I agree wholeheartedly. "Many investors simply want someone to talk to when the stock market is volatile or when they need to start drawing money from their investments to live on. They may not get that from the no-load mutual fund companies."
Humberto Cruz is a columnist for Tribune Media Services.