CFS Certificate and Fund Training: Six Questions to Ask Before Investing

When it comes to mutual fund investing, you must be aware of the pros of investing in mutual funds as well as understand the cons or dangers of investing in mutual funds. Certified Fund Specialist (CFS) training is available to those who wish to earn the prominent CFS certificate. Completion of the certificate demonstrates that the advisor is an expert when it comes to understanding mutual funds. You may be wondering what you will learn in fund training that you do not already know. Well, there are six questions that should be answered before investing in a mutual fund, and earning a CFS certificate may help you answer them.

The first question is: does the fund fulfill the investor's objective? Every mutual fund has one or more objectives and so should every investor. Each fund's objective is appreciation, income, or a combination of both. A fund's objective is usually more important than the skills of its manager. Most performance is related to being in the right category at the right time. If a category is doing well, even a mediocre manager is likely to turn in good numbers.

The second question to ask is: how has the fund performed? During your fund training, you will learn how to track the previous performance of a fund. If you want to make sure that you are going to be comfortable with a fund, do a simple check to see whether you can tolerate those periods when the fund is in the red. Look at how much the fund has lost in the past and ask yourself if your client could hold on during those periods.

Next (the third question), you want to find out what has been the fund's risk level. This will affect your willingness to invest, as it is more dangerous when the fund carries a high risk. You will learn how to handle client's requests to invest in risky funds and sometimes persuade them against it. On the other hand, you may also face situations in which the client is hesitant to invest in a high risk fund, even though it may be a good opportunity for them.

The fourth question - another important piece of information that you need to be aware of is who manages the fund. Investors are very concerned with who is running their mutual funds. They are interested to see if the fund's manager was successful at making money in the past. Although past performance does not ensure future gains, the management style of the fund can influence whether or not one chooses to invest in it.

Fifth: another interesting thing to ask would be how much it costs to own the fund. The cost of ownership involves bid-ask spreads, broker commissions, market-impact costs and opportunity costs. This results in either a lower price or fewer shares being carried out.

Lastly (the sixth and final question), you want to ask what other funds are in the fund family. Different fund families have diverse policies and areas of capability and services. You should research several of them to decide if these strategies are manageable for your preference. Although your CFS certificate will give you more information that may help you invest in mutual funds for your clients, you need to have knowledge of your own in order to make the best decisions possible for them. There are many other aspects to take into consideration before fulfilling the investment and fund training will improve your skills in becoming a renowned and trusted financial investor.

Cory Bowman is Director of Ops at the Institute of Business Finance. IBF has helped thousands of members of the financial services industry attain designations. For more information about CFS Certificate, Fund Training visit

Share Article

Sponsored Links

Related Articles