Regulators are seeking input on the best way to compensate advisors for their advice in the event of a ban on embedded trailer commissions for mutual funds. While many investors don’t even know these fees exist, they’ve become a $5-billion hot potato and their days look numbered as transparency increases and we see a boom in low-fee alternatives such as exchange-traded funds (ETFs).
What comes next?
Regulators have indicated they are exploring a ban but are at this point just asking for input on how an alternative fee-for-advice might work. Expect a noisy debate this fall.