Clean shares of mutual funds, the investment innovation designed to allow brokers and advisors to serve as level fee fiduciaries under the Labor Department’s conflict-of-interest rule, are expected to revolutionize how financial professionals are compensated and how their clients pay for services.
But before that can happen, regulators and industry are going to have to settle on exactly what constitutes a clean share.
Earlier this year, the Capital Group, owner of American Funds, requested and received guidance from the Securities and Exchange Commission for clean shares, which are packaged without front-load sales commissions and deferred 12b-1 distribution charges. In lieu of those commissions and fees, which have been traditionally set by asset managers, brokers and advisors are allowed to add on their own charge for advisory services on top of funds’ management costs.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
