The DOL's fiduciary rule will spur more than 3,500 mutual funds to launch a new low distribution fee share class for broker-sold IRA accounts, according to a Morningstar study. Maximum front-end loads for the most common type of share sold through a broker, Class A, cost an average of 4.85% of the investment, stated the report. In contrast, new Class T shares will cost 2.5% or less, and another new class, so-called "clean" shares, would eliminate the fees entirely at the fund level, the research firm found. The T shares (transactional) allow advisors to continue collecting commissions from funds on their platforms that adopt a consistent agreed-upon fee model. Clean shares, on the other hand, open more options for fee-only fiduciaries to establish and charge their clients according to their own rate models. The investment research firm submitted the white paper to the DOL, following the department's 60-day delay in implementing the fiduciary rule.
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