BEACON HILL RESEARCH
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Revenue Sharing Arrangements
(aka “Payment for Shelf Space”)
This is a common practice amongst brokerage firms where mutual fund companies that pay the brokerage firm get preference in their sales efforts.
Some brokerage firms will continue to offer the funds of non-paying mutual fund families- but will not allow the mutual fund wholesalers to interact with their staff. Some brokerage firms will simply not give non-paying mutual fund companies training materials to their brokers. In essence, this “payment for shelf space” is a payment that the funds must pay for the brokerage firms to push their product, which is eventually extracted from the assets of the mutual funds and the clients who own them.
Click on a link to learn more about each company and their revenue sharing
arrangements.
Edward Jones
"...there are financial incentives associated with the sale of funds from the preferred fund families, Federated Investors [American Funds] and Putnam Investments...creates a potential conflict of interest in the form of an additional financial incentive to the firm, its financial advisors and equity owners in connection with the sale of the funds from these fund families. Virtually all of Edward Jones' transactions relating to mutual funds involve preferred family funds...For the year ended Dec. 31, 2007,
Edward Jones received approximately $125 million in revenue sharing payments from the preferred fund families as designated throughout 2007 and Federated Investors. For that same period, Edward Jones' net income was $508 million."
Almost 25% of Edward Jones net income is derived from payments that
American Funds and Putnam give to sell their product.
Funds: American Funds, Franklin Templeton, Goldman Sachs Funds, Hartford
Mutual Funds, Lord Abbett Funds, Oppenheimer Funds, Van Kampen Investments
Calculation:
View Chart
View Edward Jones Disclosure
Merrill Lynch
"Merrill Lynch receives compensation from fund sponsors for...making Financial Advisors or other employees available for education regarding their funds; sales related reports and other information; and branch office support, including phones, computers, conference rooms, as well as facilities and personnel support for prospectuses and promotional and other materials relating to their funds."
The funds pay Merrill Lynch so that they
can show Merrill Lynch employees how to sell their products. They also pay
for their overhead expenses.
Funds: Not Listed
Calculation: Up to $19 for each position or up to 0.13% annually of the
value of fund shares held in a client's account as well as compensation from
fund sponsors for these services of generally up to 0.25% on a portion of
mutual fund purchases and generally up to 0.10% annually on a portion of
mutual fund assets.
View Merrill Lynch Disclosure
Morgan Stanley
"Fund families make these payments (sometimes referred to as "revenue-sharing payments") in order to receive the opportunity to distribute their funds through Morgan Stanley."
Funds: Aberdeen Funds, AIG SunAmerica Capital Services, Inc., The Alger Funds, Allegiant Funds, AllianceBernstein, American Century Investments, American Funds, Aquila Group of Funds, BlackRock Funds, Calamos Family of Funds, Calvert, Cohen & Steers, Columbia Management, Credit Suisse Funds, Davis Funds, Delaware Investments Family of Funds, Diamond Hill Funds, Dreyfus, DWS Funds, Eagle Family of Funds, Eaton Vance, Evergreen Investments, Federated Investors, Inc., Fidelity Advisor, Fifth Third Asset Management, First American Funds, First Eagle Funds, Forward Emerald Funds, Franklin Templeton Investments, FundVantage Trust, GAMCO Investors, Inc., Goldman Sachs Asset Management, The Hartford Mutual Funds, Henderson Global Funds, Highland Funds, HighMark Funds, Hotchkis and Wiley Funds, ING Funds, Integrity Mutual Funds, Invesco Aim Investments, Ivy Funds, Janus Funds, JennisonDryden and Strategic Partners Mutual Funds, John Hancock Funds, LLC, JPMorgan Funds, Keeley Family of Funds, Kinetics Mutual Funds, Inc., Legg Mason Partners Funds, Lord Abbett, MainStay Funds, Managers Investment Group, MFS Investments, Morgan Stanley Funds,
The Munder Funds, Nationwide Mutual Funds, NATIXIS Funds, Neuberger Berman Funds, Nuveen Investments,
Old Mutual Investment Partners, The Olstein Funds, OppenheimerFunds, The Phoenix Funds, PIMCO Funds &
Allianz Funds, Pioneer Investments, Principal Funds Distributors, Inc., Putnam Investments, RiverSource
Investments, LLC, RS Investments, Rydex Funds Services Inc., Seligman Advisors, Inc., The Sentinel Funds,
Thornburg Investment Management, Touchstone Investments, Transamerica Funds, UBS Funds, Van Eck Global,
Van Kampen Investments, Victory Funds and Wells Fargo Advantage Funds.
Calculation: Up to 0.20% (20 basic points)
View Morgan Stanley Disclosure
Raymond James
"Fund distributors and/or their affiliates may compensate Raymond James for training and education seminars for Raymond James’ associates, financial advisors, clients and potential clients. This may include due diligence meetings regarding their funds, recreational activities or other non-cash items. The representatives of fund companies attend meetings, provide speakers for educational presentations and attend events where they can interact with our financial advisors." ..."These fees do not purchase placement on any preferred product lists or any special positioning or research coverage of funds by Raymond James....Raymond James provides a variety of marketing services and other support to sponsors of mutual funds regarding their funds. These services include, but are not limited to, the provision of: detailed mutual fund information to financial advisors..."
Funds: Not listed.
Calculation: Do not generally exceed $.05 per executed share.
View
Raymond James Disclosure
Robert Baird
"The advisor and/or distributor of fund families that have been identified for inclusion into the
'Baird Mutual Fund Leaders' Program may provide such financial support to Baird….In exchange for such financial support, fund companies that have earned Mutual Fund Leader status
may receive such benefits as:
• Participating in meetings and conference calls with Baird Financial Advisors and home office
personnel
• Speaking and networking opportunities at Baird regional and national forums
• Conducting marketing campaigns tailored to the needs of Baird Financial Advisors
• Participation by Baird Financial Advisors and home office personnel in fund company due
diligence
meetings
• Posting of marketing materials on internal websites accessed by Baird Financial Advisors
• Information regarding Baird Financial Advisors
• Information on fund company market share within Baird"
Funds: AllianceBernstein, Allianz Global Investors, American Funds, Eaton Vance, Franklin Templeton, Goldman Sachs, Hartford, Heritage, John Hancock Funds, Lord Abbett, MFS, Oppenheimer, Pioneer, Putnam and Van Kampen
Calculation: Will not exceed 0.10%
View Robert Baird Disclosure
Smith Barney/Citigroup
"From each fund family we offer, we seek to collect a mutual fund support fee, or what has come to be called a revenue-sharing payment."
Fairly straightforward; To get your funds sold by Citigroup, you have to pay to play.
Funds: American Funds, Legg Mason, Franklin Templeton, Oppenheimer, Lord Abbett, MFS, Van Kampen, Fidelity Advisor, AllianceBernstein, Eaton Vance, Calamos, Putnam, Davis, AIM, Allianz, Hartford, Columbia, Evergreen, Federated, Ivy, IDEX, Thornburg, BlackRock, Pioneer, Nuveen, Scudder, Goldman Sachs, John Hancock, Templeton Offshore, ING, Prudential Financial, Delaware, IXIS Funds, JP Morgan, Cohen and Steers, Mainstay, Dreyfus, Seligman, Gabelli, Olstein, First Eagle, SunAmerica, Henderson, MFS Meridian, Phoenix, Principal Funds, Munder, Janus Advisors, Touchstone, Van Eck, Alger, Schroeder, Fidelity Advisor World, Rydex, Sentinel, Enterprise, Wells Fargo Funds, Frank Russell, Emerald, Victory, Putnam Offshore, American Century, Calvert, Credit Suisse, First America, Heritage, Janus World Fd Plc, Gartmore,Managers, Prudent Bear, Old Mutual Fund Advisor, North Track, Domini, GE, Kensington, RS Funds, Diamond Hill Funds, Highland Funds, Kinetics, Snow Capital, Strong
Calculation: (a) 0.09% per year ($9 per $10,000) on fixed income fund assets held by our clients, and (b) 0.12% per year ($12 per $10,000) on equity, balanced and offshore fund assets held by our clients, subject to a minimum charge of $50,000 per year per fund family, or $25,000 per year for fund families that offer five or fewer funds at Smith Barney.
View Smith Barney/Citigroup Disclosure
UBS Financial Services
"These separate compensation amounts (commonly referred to as "revenue sharing") are based on two components (i) the amount of sales by UBS Financial Services Inc. of a particular mutual fund family to our clients (excluding sales through wrap-fee programs), and (ii) the asset value of a particular mutual fund family's shares held by our clients at UBS Financial Services Inc...UBS Financial Services Inc. determines the level of access to our branches based on our own review and evaluation of mutual funds and fund families. There are multiple factors involved in determining a particular mutual fund's level of access to our branches. Although revenue sharing may be one factor"
Funds: Not listed
Calculation: (i) 0.05% per year (paid quarterly) on all sales of mutual fund shares (excluding sales through wrap-fee programs); (ii) up to 0.10% per year (paid quarterly) of the asset value of all equity mutual fund shares held at UBS Financial Services Inc.; and, (iii) up to 0.075% per year (paid quarterly) of the asset value of all fixed-income mutual fund shares held at UBS Financial Services Inc. (other than money market, institutional and offshore funds).
View UBS Financial Services Disclosure
Wachovia/AG Edwards
"We reserve the right in the future to limit branch access to mutual fund companies that do not provide marketing support or meet other criteria."
Funds: AIM, Alger**, AllianceBernstein, Allianz/PIMCO, American Century, ACM Global Investments*, American Funds***, Aquila, Arrow Funds, AXA/Enterprise, BlackRock/State Street, CDC/IXIS, Calamos, Calvert, Claymore Securities, Cohen & Steers, Columbia, Davis**, Delaware/Lincoln, Dreyfus, Eaton Vance, Eaton Vance Emerald*, Eaton Vance Medallion*, Emerald, Enterprise, Evergreen, Federated, Fidelity Advisors, Fidelity Advisors World*, First Eagle, FPA, Franklin Templeton**, Gartmore, Goldman Sachs, Guardian, Hartford, Henderson Global, Highland Investors, Icon, ING, Invesco*, Investec*, Ivy/Waddell Reid, Janus, Janus International*, Jennison, Dryden, John Hancock, JP Morgan**, Jundt, Kinetics, Kopp, Legg Mason*/Legg Mason, Partners**, Loomis, Lord Abbett, Mainstay, Merrill Lynch, MFS, MFS Meridian*Morgan Stanley*, Munder, Nuveen, Old Mutual Investment, Partners, Olstein, Oppenheimer, Pacific Life, Parvest*, Phoenix, Pioneer**, Principal/WM Funds, Putnam**, River, Source, Rydex, Schroders*, Scudder**, Security Management, 6th Avenue, Seligman**, Sentinel, Skandia Global*, SunAmerica, Thornburg, Touchstone, Transamerica/IDEX, Van Kampen,
Waddell & Reed, Wells Fargo/Strong, WM Funds
Calculation: range as high as 0.12% annually of the dollar value of fund assets under management at Wachovia Securities. The annual payment may be subject to a minimum charge of $25,000 per year per fund family.
View Wachovia/AG Edwards Disclosure
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