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WSJ Discusses Revenue Sharing Conflict

On February 26, Wall Street Journal writer Jason Zweig posted a Money Beat column discussing the practice of revenue sharing. In his article, Zweig explains the conflict of interest this practice introduces for banks and wirehouse brokerage firms that distribute mutual funds and, as importantly, the challenges that investors face uncovering information about these questionable practices.

According to Zweig's article, Edward Jones collected more than $153 million in revenue sharing fees in 2014. At Merrill Lynch, mutual fund companies pay up to 0.25% of sales and 0.10% of assets annually. And Morgan Stanley recently disclosed that it receives $750,000 per year from 28 "global partner" mutual fund companies and $350,000 per year from another 11 "emerging partners" for a total of almost $25 million a year of revenue. 

Zweig suggests that the Department of Labor's pending "fiduciary rule" expected to be released later this spring and go into effect as early as this fall could "put revenue sharing into retreat" as these firms reevaluate their revenue models and consider how they will comply with new rules that will likely require them to act in accordance with the fiduciary standard.

To access the article on the the Wall Street Journal's website, visit: (SUBSCRIBER CONTENT)

CAPTRUST Financial Advisors is an independent investment research and fee-based advisory firm specializing in providing retirement plan and investment advisory services to retirement plan fiduciaries, executives, and high-net-worth individuals. Headquartered in Raleigh, North Carolina, the firm represents over $180 billion in client assets with offices in Alabama, California, Connecticut, Florida, Georgia, Iowa, Michigan, Minnesota, Missouri, New York, North Carolina, Ohio, Pennsylvania, Texas, and Virginia.



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