New Advisor Regulatory Burden Will Actually Be "Modest," Analysts Say Hot

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.

This Website Is For Financial Professionals Only