Mutualfundreform.com

If you ask any investor: “Which federal agency is supposed to be looking out for your best interests?” the most common answer would be the SEC. That is the wrong answer.  The correct one is the U.S. Department of Labor (DOL), which will enact new regulations in July that will finally give individual investors some leverage over the mutual fund companies and others which administer their 401(k) plans. Given the…

In what is being called the first suit involving revenue sharing and fee disclosure and heightened transparency, a Missouri company has been ordered to pay $35 million to current and former plan participants. The lawsuit  (Ronald Tussey et al v. ABB Inc. et al, Case No. 2:06-CV-04305-NKL, United States District Court, W.D. Missouri, Central Division, March 31, 2012.)  was settled in favor of the plaintiff as the court found that…

“The Securities Industry continues to meander around the 800,000 job level, where it has been stuck for nearly 3 years. March saw the loss of a few hundred jobs.”–BrokerHunter, April 10, 2012 If any investors wonder whether they are getting the best service possible from their brokerage firm or fund company, this employment chart may be enlightening. It shows the number of layoffs in the securities industry over the past…

If individual investors have not gotten the message so far, here is another message that comes from the mutual fund industry:  The commissions your broker generates are more important than any investment return you receive. Or in investment industry jargon, it’s all about the “yield to broker” and not about anything the client earns.

Revenue sharing is one of the mutual fund industry’s most controversial and least talked about practices. It affects how mutual funds are sold to Registered Investment Advisers (RIAs), how much compensation is paid to mutual fund wholesalers, how conflicts-of-interest are created between RIAs and their clients, how 401(k) plans are structured and what fund they offer plan participants, and indeed how the entire fund industry operates.

Humility is not one of the personal traits held by many people in the investment business.  This includes everyone from portfolio managers to advisers to mutual fund wholesalers.  Part of this is due to the job.

With over $ 270 billion in assets, target-date funds (TDFs) continue to be the default provision favorite for millions of future retirees as part of the Pension Protection Act of 2006.  But despite their wild popularity, TDFs have yet to overcome what many consider some fundamental design flaws that make them the less-than-perfect default investment choice for millions of investors. One of these major shortcomings occurs when a person actually…

While they will not take effect until April 2012, the first changes from the new DOL disclosures have already emerged, months before the new rules are slated to become effective.

 “The U.S. job market is showing signs of a sustained recovery. But the country’s prolonged struggle with unemployment will leave scars that are likely to remain for years, if not generations.” –Ben Casselman, The Wall Street Journal, Jan. 9, 2012 While the prevailing mantra for the upcoming election is “job creation,” the better long-term goal may be the daunting task of replacing the trillions in lost wealth from the housing…

If you participate in a 401(k) plan or have a role in administering one, the year 2012 will be important.  The reason: 2012 is when administrators and plan participants will be discussing about the little-known practice of revenue sharing and how their 401(k) plan providers charge for their services. On April 30, 2012, the Department of Labor’s (DOL) new fee disclosure regulations go into effect, largely due to the “unprecedented attention” about the need…