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Fees Are Down, But Not for the Reason You Think

Fees Are Down, But Not for the Reason You Think

Some go up, some go down.

Asset-weighted average fees across all U.S. mutual funds and ETFs fell from 0.64 percent in 2014 to 0.61 percent in 2015, according to a new report from Morningstar. But the research firm suggests the decline is not due to changes in the fees set by asset management firms; rather, asset flows out of more expensive funds (which are often active) and into cheaper funds (which are often passive) are driving down asset-weighted fees. Morningstar believes weighting the average expense ratio by assets provides a more accurate picture of the cost borne by investors. The equal-weighted average, by contrast, can be skewed by a few outliers, such as high-cost funds that have low asset levels. “If we look at the largest 1,000 share classes, which account for about 75 percent of assets in mutual funds and ETFs, the simple average expense ratio remained at 0.64 percent from 2013 through 2015, as some fees go up and some go down,” the report said. But this still doesn’t tell the whole story, Morningstar says. “While certainly a positive trend, it’s worth remembering that fund expenses are not the whole story, as investors often pay additional fees on retirement platforms and for advice,” said Patricia Oey, senior manager research analyst for Morningstar.

Raymond James Names New Alex. Brown Chairman

Seth Waugh is on the advisory board of the PGA of America. | Copyright Michael Cohen, Getty Images

Raymond James Financial has named Seth Waugh, the former CEO of Deutsche Bank Americas as non-executive chairman of its Alex. Brown division. The appointment is contingent upon the closing of Raymond James' acquisition of Deutsche Bank Wealth Management's U.S. Private Client Services unit, expected in September. Waugh, a 35-year veteran in the financial services industry, joined Deutsche Bank in 2000. Prior to that, he was CEO of Quantitative Financial Strategies and spent 11 years in various roles at Merrill Lynch. Late last year, Raymond James announced it had acquired Deutsche Bank's private client brokerage unit, adding about 200 advisors to its ranks.

Riskalyze Updates for DOL Compliance

DOL compliant.

Following Cetera’s announcement of a technology suite designed to help advisors comply with the Department of Labor fiduciary rule, technology vendor Riskalyze introduced an update also designed to help advisors adapt. The company said it would help with the "best interest contract exemption (BICE)" by automating a point-of-contact audit trail at each stage of the client relationship. Riskalyze is also updating its Compliance Cloud feature to help advisors with missing BICE documentation, mismatched risk objectives, high-risk positions, a high rate of 401(k) rollovers, or hyperactive accounts. Aaron Klein, Riskalyze’s CEO, also said digital advice services like his company’s Autopilot present advisors with an opportunity to serve smaller accounts within the new regulatory environment.

Redtail Changing Approach to Integrations


Redtail CRM is changing the way it goes about integrating with other advisor technology vendors. Instead of forming official partnerships and having programmers build the necessary code, which often results in a rather limited integration, Retail has partnered with Zapier, a technology platform that focuses solely on building advanced integrations. Advisors using Redtail can use Zapier to define what information they want to automatically move to other apps, and Zapier already has those bridges built. This could help advisors already invested in a number of third-party technology firms have a more unified tech platform by eliminating the need for them to wait for Redtail to build features between each technology vendor.

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