According to your latest article re: The Genesis of DSC (forwarded to me by Preet, BTW), you refer to trailers as “fees”. Please don’t. As you will recall from previous conversations, all prospectuses and regulators refer to trailers as “commissions”. The “re-branding” of the actual status of trailers is something the industry does in trying to legitimize their services as being offered by professionals, not salesmen. If, as you so often say, mutual funds are sold, not bought, then surely you would agree that the term “Trailing Commission” is not only technically correct, but that it is also a more accurate term from a moral perspective, as well.
The mutual fund industry seems determined to engage in a clandestine form of re-branding. Specifically, they figure that if enough people will refer to trailing commissions as “trailer fees”, then these commissions will undergo a metamorphosis into fees simply by virtue of having been re-positioned by other people in the broader marketplace. Alas for mutual fund companies (and thank goodness for consumers), calling an apple an orange doesn’t turn it into an orange. Trailers were, are and always will be a form of commission. Here’s why the difference is critical: professionals charge fees; sales representatives earn commissions. The fund industry wants to position representatives as professionals without having them actually ACT like professionals. As of today, many commentators, journalists and others have been unwittingly co-opted into this subtle, but highly dangerous re-branding scheme.
Thanks to John for his comments and his permission to post them to this website. Comments are welcome as always.