Study says index fund investors pay more with broker - Nov. 30, 2006

While not exactly ground breaking (I am sure every finance professor in the country has been saying this for years), it is an interesting article and good for introductory investment classes etc.

From CNN: Study says index fund investors pay more with broker - Nov. 30, 2006:

"Investors who rely on a broker to recommend an index mutual fund could be paying a whole lot more that they have to, according to a study released Thursday.

The study, produced by the Zero Alpha Group, a network of financial advisory firms, and Fund Democracy, an advocacy group for mutual fund shareholders, contends that investors that use a broker are typically sold index funds with higher operating expenses, without necessarily offering a performance premium....

"Brokers are supposed to work for their clients, but when recommending a generic product such as an index fund, they refer their clients to more expensive funds and then collect sales charges to boot," said Mercer Bullard, president of Fund Democracy and a professor at the University of Mississippi School of Law."

What can investors do? One solution is to buy your funds directly from the fund company (eg. Vanguard, Fidelity, etc).