Storefront Service for Smaller Investors

November 14, 2008

By World-Herald Staff Writer, Joe Ruff

The goal of the Mutual Fund Store is to bring investments to the masses.

Whether the masses are interested right now in the midst of a recession and almost daily drops in the stock market is another question.

Founded in 1996 by Adam Bold of Overland Park, Kan., who remains the company's chief investment officer, the Mutual Fund Store has 77 outlets nationwide, 62 of which operate as franchises. The company's business model is to open in suburban retail areas that are accessible and visible to a large number of people.

Doug Erbert is senior investment adviser at the Mutual Fund Store in Westport Center, 4122 S. 144th St., which opened in 2002.

The company-owned store, the only one in Nebraska and Iowa, shares the same red brick facade as several other tenants at Westport Center, including a restaurant, hair salon and physical therapy clinic.

Events of the last few months have prompted some clients to leave the stock market, Erbert said, but many have stuck with their investment plans. Others have entered as new customers in hopes of getting in near the bottom, he said.

"We're still receiving a steady flow of new customers."

The Mutual Fund Store targets people who have $50,000 or more to invest and might not have the knowledge or interest to pick mutual funds and monitor their performance, according to the company. It charges a fee based on a percentage of a client's account.

Jeff Sharp, a wealth strategist at SilverStone Group in Omaha, said the Mutual Fund Store has a place in the investment landscape. Many financial planning firms want clients with larger sums to invest.

"Since they accept smaller investment accounts, they do serve a market that has traditionally been underserved by advisers," Sharp said.

Chris Braudis, president of the company, said the Mutual Fund Store doesn't have "the high-rise and mahogany" typical of many wealth management firms.

"We try to focus on storefronts where our clients live," he said.

The Omaha store is pleasantly furnished, with seating in a reception area and two conference rooms, along with offices for advisers Erbert and Brian Leslie.

Erbert said he and Leslie oversee more than $100 million in assets for individuals and small companies' 401(k) plans. They charge clients an annual fee of about 1.5 percent of the money they have invested. Fees drop to 1 percent or even less as accounts grow, Erbert said.

"We tend to be for clients who don't have the time or expertise to handle their portfolio," he said.

The Mutual Fund Store doesn't offer advice beyond mutual fund selection and monitoring, though it does take into account people's overall financial situations, Leslie said.

"We don't bill ourselves to be an all-inclusive financial management firm," said Erbert.

While Sharp at the SilverStone Group acknowledged that advice on mutual fund selection is a needed service, he and several other financial planners questioned whether that was comprehensive enough for people needing to make decisions on wide-ranging issues such as retirement, life insurance and college savings.

Richard Salmen, a financial planner in Overland Park and president-elect of the Financial Planning Association based in Denver, said managing a person's investments shouldn't be done in a vacuum.

"While investing has been a hot commodity over the past few decades, the bloom may be off that rose," said Jay Hutchins of Comprehensive Planning Associates in Lebanon, N.H.

"Single-faceted advisory firms who rely upon investment management alone to attract and retain clients may find hard sledding ahead," Hutchins said.

Braudis said the Mutual Fund Store focuses on finding the best 70 or 80 actively managed and successful mutual funds. It doesn't get involved with things like commodities and hedge funds, he said.

"It won't be an exotic, quick money maker, but you're going to do OK," Braudis said.

Actively managed mutual funds try to exceed the market average with investment strategies, as opposed to a fund that simply mirrors a market index.

Actively managed funds often carry higher operating fees, which customers pay along with the Mutual Fund Store's fees. Some financial planners said the performance of many actively managed funds doesn't justify their relatively high fees.

Erbert said the results justify the additional expense.

Braudis acknowledged that gains in the stock market beginning in 1996 brought many people to the mutual funds industry and to the Mutual Fund Store.

Those boom years may be over for a while, but people remain in the stock market, he said.

"People continue to seek us out."