Barbara Roper, director of investor protection for the Consumer Federation of America, a Washington, D.C., advocacy group, notes that 12b-1 fees were originally meant to pay for a fund's marketing. Many investors don't realize they have evolved from that original intent, she said.
At the same time, the fees have ballooned to $9.5 billion in 2009 from just a few thousand dollars in 1980, when they were first permitted, according to the SEC.
Right now it's difficult for investors to know what they're paying, and whether they're getting their money's worth in terms of advice, Roper said. Some may just be buying products without real advice, she said.
The proposed changes will help small investors with simple accounts decide whether the "true cost" of advice is worth it, Roper said. Some may seek other options while others may decide, "I want someone to help, and I'm willing to pay for it."
If the changes are implemented, Bacci said, a smaller investor who requires a lot of service may be asked to pay a fixed fee for advice. For example, an advisor might charge a "couple of hundred dollars," to sit with the investor a few times a year and make some general recommendations, he said.
"You can't spend a significant amount of time on a portfolio, theoretically, if you're not earning anything," he said.
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