An element that is consistently mentioned in excessive fee litigation is revenue-sharing—and while it’s always noted that it’s not illegal “per se”… well, there’s an implication. This week we’d like to know if it’s (still) part of your practice(s).
Mutual funds have long had as an element of their expense structure a set aside to cover fund sales and distribution costs—and since at least the 1980s those have frequently been “shared” with the parties that provided that distribution support, typically recordkeepers and advisors. This so-called “revenue-sharing” has been trotted out in just about every excessive fee case, not as an illegal practice per se, but there always seems to be a pretty clear implication that it’s at least “unseemly,” and perhaps suggestive of other issues.
Indeed, at least one study has claimed that high-revenue-sharing funds are more likely to be added to the investment menu of 401(k) plans, are less likely to be deleted and participants face significantly higher fees.
That said, at least among 401(k) specialist advisors, there’s a sense that the role of revenue-sharing is fading—a premise that we’d like to validate (or refute) in this week’s NAPA-Net Reader Radar poll.
REPLY to this week’s NAPA-Net Reader Radar poll at https://www.research.net/r/2GHQW58.
And we’ll “share’ the results with you on Friday.
