Mutualfundreform.com

Of all the astronomical numbers associated with the financial collapse–$8 trillion in lost housing equity from 2001 to 2008, and the $4.7 trillion bailout program–perhaps the largest economic cost of the long-running recession comes from the wasted talents of millions of unemployed Americans. With the official rate of unemployment running at 9%, which translates into nearly 14 million people out of work, the nation is not only being deprived of…

Most mutual fund shareholders don’t know what they are being charged for their mutual funds and more importantly, why these expenses are critically important. In normal economic times, when the the economy is healthy, fund fees erode your investment returns, but they are offset by the investment gains. The fees are still significant, and in many cases too expensive compared to what the shareholder gets in return, but the emotional…

There are over 8,000 mutual funds in the U.S.* and virtually all of them charge fees to shareholders to help offset their operating expenses.  This is a normal cost of doing business. But the mutual fund industry considers itself special.  Over the years, it has lobbied securities regulators for exceptional treatment, especially in the area of offsetting their large mutual fund marketing and sales expenses by charging these costs off…

How much money do 12b-1 fees take from shareholders? An article, American Funds Hit With 12b-1 Lawsuit  (The Street.com, July 2, 2008, by Kevin Burke) reported  that American Funds in 2007 paid out over $2 billion in 12b-1 fees  in 2007. An investor in the $122 billion American Funds EuroPacific Growth Fund is suing the fund family and its parent for alleged misuse of 12b-1 fees. The suit challenges a longstanding…

  As the battle for financial reform continues into 2011, the battle lines are clearly drawn: It’s the professional financial services industry against its own customers.  While there are pockets of resistance, such as the Americans for Financial Reform, and the Committee for the Fiduciary Standard, have opposed any attempts at fee reform, increased transparency and adopting a fiduciary standard.  Any of these reforms would address the issues related to…

The current (August 27, 2011) issue of Barron’s has published my op-ed,”Why the Fund Industry Needs Shareholder Advocates” in its “Other Voices” section, page 45. The op-ed cites the need for fund companies to more aggressivly demonstrate they are acting in their own customers’ best interests.  While this may seem an obvious thing to do, the fund industry in general is governed by a sales mentality, which puts the needs…

The proposal for creating Shareholder Advocate positions at the nation’s mutual fund companies is designed to correct the inherent conflicts-of-interests that exist between the fund company’s sales organization and its own customers. These conflicts of interest invariably are created when the inherent pressures to sell mutual funds clashes with the specific investment needs of an individual shareholder, including the need for the lowest possible total expense ratio, full disclosure of…

The current gatherings of anti-Wall Street protestors seem like amorphous groups, but the protests center around a variety of issues related to financial insecurity.  According to the protestors, every class strata, with the obvious exception, is financially stressed and their losses in home equity and market portfolios will take years to recover. Consider that the Republican Party is openly advancing the cause of the top 1% of the U.S. population…

Want to increase your 401(k)’s returns by up to 28%? Here’s a simple way to do it:.  Don’t focus on fund selection or the asset mix; just look at the most mundane, boring statistic in investing: fees. Fees are off the radar screen for most 401(k) plan participants, and sadly, even their 401(k) plan administrators, but in today’s higher risk, low-return environment, one of the very few things an investor…

As discussions on Capitol Hill continue about the need for broker-dealer to adopt a uniform fiduciary standard, a lawsuit may provide some answers to a Congressman’s question about the lack of hard data. The question about the need to supply hard numbers to prove the cost of violating suitability standards was raised by Rep. Scott Garrett, R-N.J., chairman of the House Financial Services subcommittee.  Garrett (pictured) raised the question during…