Mutualfundreform.com

From the perspective of individual investors, revenue sharing is the Trojan Horse of the mutual fund industry. That means most investors have no idea that when they buy an actively-managed load fund, with its implied promise of above-average returns, they are also buying a package driven by 12b-1 fees and revenue sharing deals that they commonly do not know exist. But here’s a twist on this common story: What if…

Most of the discussions about the need for greater transparency in financial transactions has centered on the need to adopt greater fiduciary responsibilities. But there is also another reason: economic. Mutual funds benefit financially from the lack of transparency.  When fund companies make it difficult for investors to choose between the 8,029 mutual funds and 21,631 different share classes*, the fund companies stand to profit. That’s why fund companies intentionally…

The SEC has recommended that investment professionals providing personalized advice to retail customers follow a fiduciary standard of care, according to a SEC staff report sent to Congress on January 21. The long-awaited staff report recommends that the SEC commissioners write regulations to create a fiduciary standard for broker-dealers, which is about the same as one currently in force for investment advisors.   Currently, broker-dealers must only meet a broad suitability…