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The chart above is making the rounds today. The dumb money can’t catch a break. Everybody’s laughing at the poor retail investor. But what I’m wondering is how many of these mutual fund investors are actually being directed by advisers? I’d wager it’s a fair number.

Yes, I know that individual investors are famous for buying high and selling low but advisers are subject to the very same biases and emotions. And their layers upon layers of fees alone can be the cause of significant underperformance.

I’ve seen advisers buy, for their clients – never with their own money, mutual funds that pay themselves fat front-end loads (upfront commissions). Then they turn around a while later and recommend selling the underperforming fund (destined to fail due to its high fee structure) to buy one just like it, paying another fat commission (aka, churning).

Where does this show up in the data and how can we blame individual investors for this sort of behavior?