Despite all the angst out there, sell side analysts at Keefe Bruyette & Woods say the cost of looming regulation for the industry will be "incremental" at worst and that fears are "overblown."
In particular, the KBW research department now believes that current proposals to put a ceiling on 12b-1 distribution fees on mutual funds will have a negligible effect on advisors' bottom lines.
Based on the dwindling amount of sales of products carrying high 12b-1 fees, market forces may have already taken care of this issue for investors, the analysts say.
Interestingly, where these products are being sold, it appears to be through fee-based relationships.
These arrangements presumably pay the advisor a lot more than the 0.25% that will be the cap for 12b-1 commissions under the new rules, so advisors will still be earning a significant amount of revenue here.
For the rest, everything hinges on whether the final rule allows fund companies to keep charging recurring fees above 0.25% for awhile.
As the analysts note, this kind of "grandfathering" approach would let the money managers keep big 12b-1 fees for longer than most investors keep their funds.