Depository Institutions and Mutual Funds

Depository Institutions & Mutual Funds WSJ Article Review

In a recent article entitled Advisers Face Barrage of Mutual-Fund Pitchmen, which was published by The Wall Street Journal on March 5th, 2013, financial reporter Corrie Driebusch describes the growing diversity in mutual fund varietals being offered by wealth management firms, as well as the deluge of telephone calls being used by mutual fund wholesalers to court potential brokers. The purpose of the article is to inform readers about this increasingly prevalent distraction faced by wealth managers and financial advisers, who are now forced to deal with dozens, if not hundreds, of solicitations on a daily basis from mutual fund wholesalers hoping to peddle the potential of a profitable fund investment. According to Driebusch, "as the largest wealth-management firms have embraced the widening range of mutual-fund offerings, from products by the traditional heavyweight fund families to newer niche strategies, brokers have more choices for their clients & #8230; but with more choice comes more salespeople knocking on doors and calling brokerage offices, shilling their newest offerings" (2013). This alarming trend is the result of a diversification of the mutual fund market as a whole, with new ratings systems allowing wholesalers to customize fund offerings to the needs of individual clients. Driebusch also quotes Evan Whittle, who works as a branch manager for Raymond James & Associates in St. Petersburg, Florida, to support her overall assertion that the ability of financial advisers to conduct their work is being compromised by the intrusive practices of mutual fund wholesalers. As Whittle describes the situation in his interview with Driebusch, "ten years ago we didn't have ratings on nonrestricted international bond funds because they didn't exist in that name or they were not a recognized investment strategy" (2013), and because of the abundance of new mutual fund ratings and classifications, wholesalers are working proactively to secure their share of this lucrative market.

Upon concluding a close reading of this article to examine its rhetorical efficacy, an informed reader is forced to consider several crucial questions: If financial advisers are so troubled by the so-called barrage of solicitation from mutual fund wholesalers, why do managers and executives at these firms allow employees to take the disruptive calls in the first place? Despite their aggressive marketing practices, do mutual fund wholesalers play a functional role in the realm of high finance, and if so, are these phone and in-person solicitations justified as a legitimate industry technique. The first question is important enough that Driebusch mentions the role of "gatekeepers" multiple times throughout the article, observing that "typically managers such as Mr. Whittle are the gatekeepers at their brokerage branches, deciding how many wholesalers can visit and when" (2013). Her reporting suggests that each brokerage firm applies different methodologies to cope with the onslaught of solicitation calls from mutual fund wholesalers, with some managers stonewalling all attempts to distract brokers, and others allowing a select few brokers to make contact only with certain preferred wholesalers. The second question has implication for the article's overall sense of relevancy, as Driebusch has premised her reporting on the concept that mutual fund wholesalers are disrupting finan cial advisers with unwanted phone calls. If brokerage firms actually desire this exchange of information with the wholesalers holding access to the most advanced mutual funds on the market, however, one wonders what Driebusch's motivations were for writing this story from the particular "anti-wholesaler" perspective she employed.

In a recent article entitled Credit Unions: A Better Bet Than Banks?, which was published by The Wall Street Journal on June 5th, 2010, financial reporter Jane J. Kim reveals a growing divide in the arena of American depository institutions, as many struggling families shift their dwindling savings from traditional banks to credit unions. The purpose of the article is to explain the underlying factors fueling this financial migration, from distrust of major banks after the recession and resulting bailouts to a simple yearning for old fashioned customer service, while also posing the question of whether or not credit unions represent a viable alternative to banks for the average American. According to Kim, "with their fatter yields and lower fees, credit unions are having little trouble attracting depositors these days & #8230; (and) many are also positioning themselves as a more wholesome alternative to Wall Street bailouts, bank seizures and predatory lending scandals, offering trustworthy advice and good customer service" (2011). The reporter relies on a wealth of statistical data to provide the credit union trend veracity, referencing a Wall Street Journal analysis of data from the Federal Reserve, the National Credit Union Administration and the Treasury Department which found that "credit unions' share of the total household-savings market climbed to 10% in March, from 9.5% a year earlier" (Kim, 2011). Anecdotal evidence is also used to further support Kim's thesis, as the article describes the success of Otero Federal Credit Union in Alamogordo, N.M., where deposit growth has continued to flourish. While the majority of this article focuses on the positive benefits of credit unions as an alternative to major banks, Kim achieves the necessary sense of objectivity by assuring readers that credit unions have decided disadvantages as well. Limitations on membership eligibility, a focus on deposit products, less sophisticated wealth management services are among Kim's chief complaints with the credit union industry. Overall, however, the article makes it clear that for families struggling with exorbitant account fees, unreceptive customer service, or other dissatisfaction with major banking institutions, the personalized service and financial independence offered by credit unions may be the perfect substitute.