SEC Investor Advocate Fleming targets fees charged by advisers

Rick Fleming will push the Securities and Exchange Commission to follow through on its review of how brokers and investment advisers disclose their fees to clients

Jul 1, 2016 @ 12:02 pm

By Tanvi Acharya

To SEC investor advocate Rick A. Fleming, improved disclosure of fees and expenses charged by financial advisers is a top priority in the new fiscal year, which begins in October.

Mr. Fleming will push the Securities and Exchange Commission to follow through on its review of how brokers and investment advisers disclose their fees to clients. The scrutiny is part of a larger focus on better disclosures and will also include mutual funds, exchange-traded funds and other investment vehicles.

Mr. Fleming's office plans to be actively involved in testing the effectiveness of various types of disclosures on real-life investors.

“We will begin to consider whether investors understand the fees and expenses they pay for an array of products and service providers, including funds, investment advisers and broker-dealers,” Mr. Fleming wrote in his report to Congress, released Thursday.

“As part of this initiative, we will explore whether the various fees and expenses could be disclosed more effectively,” he said.

Management fees, custodial fees, transaction fees and commissions, along with a wide array of other potential fees associated with an individual's investment or retirement account, are mentioned as costs people might not be aware of.

To make mutual fund costs more apparent, the SEC's Investor Advisory Committee in April suggested a standardized disclosure of actual dollar costs on customer account statements.

It also argued that regardless of the type of account structure employed by financial intermediaries, they should disclose to the funds — and to investors — precisely how they are compensated.


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