B-Share Blues

April 2004
Journal of Financial Planning;Apr2004, Vol. 17 Issue 4, p22
Academic Journal
This column presents topics of online discussion for readers of "Journal of Financial Planning" for the month of April 2004. The topics are found at the journal's Web site--www.journalfp.net. B-shares are under scrutiny by the National Association of Securities Dealers and the U.S. Securities and Exchange Commission, and were directly responsible for Morgan Stanley paying a $50 million fine for failure to provide vital information about them to investors. All the attention has dampened the ardor many have had for B-shares. According to Boston, Massachusetts-based Cerulli Associates, advisors and brokers are shunning B-shares. They account for only 8 percent of all mutual fund assets as of April 2004, down from 12 percent in 1998. But, according to Cerulli, every mutual-fund share class has the potential to be mis-sold. Other share classes are also likely to get their fair share of regulatory scrutiny, and B-shares may perfectly match some clients' needs, such as those with lengthy time horizons or small investors who do not qualify for breakpoint discounts. Therefore, some of the issues that arise include the overall knowledge of investors about B-shares and how financial planners in the U.S. use B-shares.


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