Get Rid of Revenue Sharing – Really!

This should be brief.  Whether revenue sharing (which is used interchangeably with other terms) occurs in employer based retirement plans or advisory services provided to individual consumers, I don’t support it.  At all. Why can’t each service provider simply charge the consumer directly? This way, the consumer knows exactly what they are paying for and who is compensated for each service provided. This would not be difficult.  The plan sponsor would put it in their Investment Policy Statement and the individual would simply make it a requirement.  They tell their service providers, “Hey, no revenue sharing anymore. We want clarity.  We will pay you, but we do not want you sharing anything.”

I know it is not illegal, but I do not believe it is right.  Most consumers do not know this is occurring and do not know to ask about it.  Unfortunately, I also know it will probably still be occurring long after I retire!