Distribution Channels for Mutual Funds
Profile of Mutual Fund
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Chapter 1: Current Use of Channels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Use of Channels to Purchase Mutual Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Use of Channels to Purchase Nonfund Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Use of Channels for Total Investment Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Chapter 2: Channel Use Over Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Patterns in Channel Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Channel Used to Purchase First Mutual Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Channel Used to Purchase Most Recent Mutual Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Channel to Be Used to Purchase Next Mutual Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Chapter 3: Motivations for Channel Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Principles of Motivation Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Full-service Broker Channel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Discount Broker Channel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Insurance Channel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Bank Channel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Financial Planner Channel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Direct Market Channel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Chapter 4: Profile of Channel Users . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Demographic and Financial Characteristics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Current Investment Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Recent Mutual Fund Investment Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Investment Information Sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Chapter 5: Single-channel and Multichannel Users . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Channels Through Which Single-channel and Multichannel Users Own Funds . . . . . . . . . . . . . . . . . 48
Future Use of Channels to Purchase Mutual Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Demographic and Financial Characteristics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Current Investment Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Views on Saving and Investing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Investment Information Sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Single-channel Users Who Were Multichannel Users . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Chapter 6: Segmentation of Shareholder Investment Channel Needs . . . . . . . . . . . . . . . . . 57
Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Principles of Segmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Confident Guidance-Oriented Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Adviser-Dependent Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Fee-Sensitive Independent Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Cautious Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Uninvolved Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Appendix A: Research Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Appendix B: Detailed Tabulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77

Introduction . . . . . . . . . . . 1
Annual Survey. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The “Typical” Mutual Fund Owner. . 2
Variations in Shareholder Characteristics. . . 2
Chapter 1: Mutual Fund Shareholders. . . 5
Demographic Characteristics. . . 5
Employment Status and Household Income. . . 6
Financial Characteristics. . . 6
Mutual Fund Ownership Characteristics. . . 7
Goals and Mutual Fund Investing. . . 8
Views on Investment Risk. . . 8
Chapter 2: Mutual Fund Shareholders by Ownership Inside and Outside
Employer-Sponsored Retirement Plans. . .17
Household Mutual Fund Ownership Inside Employer-Sponsored Retirement Plans . .18
Household Mutual Fund Ownership Outside Employer-Sponsored Retirement Plans. . .19
Chapter 3: Mutual Fund Shareholders by Channels Used to Purchase Mutual
Funds Outside Employer-Sponsored Retirement Plans. .35
Sales Force Channel. . .36
Direct Market Channel. .37
Chapter 4: Mutual Fund Shareholders by Primary Source for Purchasing Funds. .53
Employer-Sponsored Retirement Plans as the Primary Purchase Source for Funds. . .54
The Sales Force Channel as the Primary Purchase Source for Funds. . .55
The Direct Market Channel as the Primary Purchase Source for Funds. . . 57
Chapter 5: Mutual Fund Shareholders by Generation. . .73
Generation Y (Born Between 1977 and 2001). . .74
Generation X (Born Between 1965 and 1976) . . .75
Baby Boom Generation (Born Between 1946 and 1964). . .76
Silent and GI Generations (Born Between 1904 and 1945). . .77
Chapter 6: Mutual Fund Shareholders by Age . . .91
Age of Household Head Younger Than 40 . . .91
Age of Household Head Between 40 and 64 . . .93
Age of Household Head 65 or Older. . . . 94
Chapter 7: Mutual Fund Shareholders by Household Income. . . . 105
Household Incomes Less Than $50,000. . .106
Household Incomes Between $50,000 and $99,999 . . .107
Household Incomes Between $100,000 and $149,999. . . . 108
Household Incomes of $150,000 or More. .110
Chapter 8: Mutual Fund Shareholders by Household Financial Assets . . .123
Household Financial Assets Less Than $50,000. . . . 123
Household Financial Assets Between $50,000 and $99,999 . . .125
Household Financial Assets Between $100,000 and $249,999. .126
Household Financial Assets of $250,000 or More. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
Chapter 9: Mutual Fund Shareholders by Risk Tolerance. . .141
Willing to Take Substantial or Above-Average Financial Risk. . .141
Willing to Take Average Financial Risk. .143
Willing to Take Below-Average or No Financial Risk. . .144
Chapter 10: Mutual Fund Shareholders by Year of Initial Mutual Fund Purchase. .157
Initial Mutual Fund Purchase Before 1990. . .157
Initial Mutual Fund Purchase Between 1990 and 1994 . .159
Initial Mutual Fund Purchase Between 1995 and 1999. . .160
Initial Mutual Fund Purchase in 2000 or Later . . .162
Appendix: Research Methodology. . . .175
Research Design. . . . . . . . . . . . . . 175
Interviewing. . . . . . . . . .175
Survey Weights. . . . . . . . . . . . . . . . . . . . .176
Sampling Err