March 16, 2004
The disclosure by the broker should be made at the time the mutual fund is recommended, which may be earlier than the point of sale. For example, assume the broker recommends a mutual fund and the investor wishes to do some independent research regarding the fund, including comparison with other funds. Disclosure by the broker at the time of the recommendation may be a factor in deciding whether to purchase the fund recommended or some other fund found in the independent research. If the disclosure is not made until the point of sale the disclosure may not have as much impact as it would if the disclosure was made earlier because the investor may already have a mindset regarding the recommended fund.