February 9, 2004
Point of sale clarification on costs of all financial service products particularly mutual funds is essential to consumer advocacy and transparency in purchasing financial services and products. Just as in any free market situation, you need information on both sides of the transaction for the best decision to be made. Until now, only one of the parties has had that information in an understandable way-brokers and managers know how much they get paid but the buyer does not know what he spent on his own purchase.
Once costs are clearly identified PER INDIVIDUAL INVESTOR PURCHASE, the market will determine what fees and in what amount can be tolerated by any individual investor. They will be able to vote with their wallet once fees are clearly and completely communicated before handing over any money to be invested.
The overwhelming number of my clients cannot accurately tell what they have paid in fees which by definition means they cannot independently determine their rate of return after expenses. Clarity of fees will allow anyone to compare apples to apples. The best place for this to occur is in writing at the point of sale not after purchase on an imaginary 10,000 as in the examples in a prospectus.