Greatest Regulatory Impact in 2010: Fees

Financial firms surveyed by Cerulli Associates said examination of fees, such as 12b-1 reform, will be the greatest regulatory impact in the coming year.

After fees, financial firms said the greatest regulatory impact will be a universal fiduciary standard for financial advisers (23%) and the Pension Protection Act (16%).

Cerulli conducted an end-of-the-year reader survey, with respondents comprising mostly product providers (75%), but also including broker/dealer firms (11%) and other technology providers (9%).

Now that market volatility has ironed out, the biggest business challenges facing surveyed financial firms have shifted. The surveyed firms cited client acquisition/retention as the greatest business challenge in the coming year (35%, compared to only 14% in 2009), followed by insufficient resources (21%). Last year, the biggest challenges were the economic downturn (27%) and volatile markets (25%).

The overwhelming majority of respondents expect the market to rise in 2010—but are split on what they plan to do with that expectation. The largest number of firms (43%) expect the market to rise, but will not build strategy on anticipated market action. Almost as many (39%) expect the market to rise and are building their firm’s strategy accordingly.

As far as products go, open-end mutual funds will be the primary product focus in 2010 for 87% of respondents, followed by managed accounts (63%), insurance products (28%), collective investment trusts (CITs) (19%), and exchange-traded funds (ETFs) (15%). Although passive investing and low-cost vehicles such as ETFs are attracting substantial assets, the mutual fund is still the dominant investment vehicle, Cerull notes.

More information about The Cerulli Edge—U.S. Asset Management Edition is available at