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The truth about T shares

May 18, 2017

The truth about T shares

Created to help ease conflicts, the new class has some drawbacks

May 13, 2017 | by Rob Cirrotti | GlobeSt.com

Regardless of the future of the Department of Labor’s fiduciary rule, it is clear that the fiduciary mindset is here to stay and will continue to be a catalyst for change. However, whether the future belongs to T shares is yet to be seen.

T shares came to market as a quick response to the DOL rule so that commission-based brokers could continue to earn commissions. T shares aim to address one of the main issues targeted by the DOL rule: the conflict of interest that happens when a financial professional receives greater compensation for recommending certain funds to investors and, therefore, has more incentive to recommend those offerings.

In that sense, T shares replace A shares, which generally have higher upfront commissions. By establishing a uniform front-end load — at 2.5% — and a 0.25% trailing 12-b(1) fee across funds, T shares level the playing field in terms of the potential gains financial professionals can receive based on the funds they recommend.

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Second Annual Blue Vault Broker Dealer Educational Summit 2016
2016 Broker Dealer Educational Summit 2016
May 30, 2016

Best Due Diligence meeting in the industry. No sales pitches, senior level decision makers, meaningful discussions and the Broker Dealer networking sessions were especially useful. Thanks to Blue Vault for raising the bar!