Another problem is that there is no standardized regulation for these fee-sharing structures and there’s a lack of disclosure and specification about how they work. “There is no standard way to explain what the payments are for,” Mitchell said. That makes them hard to compare, she added.

“So with Regulation Best Interest, we think it’s important the more we can get standardization the better,” Mitchell added.

The report states: “The narrative disclosures in Form ADV are difficult to systematically compare across fund sponsors. Broker disclosures will also be in different forms and in different locations.

Morningstar encourages “the standardization of such disclosures with specificity as to magnitude, circumstances warranting payment, and the exact split between the intermediary and the fund complex to inform investors and allow third parties to assess the effects of such payments on recommendations and investor performance,” the report said.

Although these payments can create a variety of conflicts and distort investment recommendations, the SEC has not historically regulated revenue sharing, which can spur fees of 25 to 75 basis points, Szapiro said.

While not all revenue-sharing payments create conflicts, “limited data impedes assessing which payments do and to what degree,” the report said. “Load sharing creates conflicts of interest when brokers have incentives to recommend one fund over another.”

Regulation Best Interest may force changes in revenue-sharing practices as brokers mitigate and disclose conflicts of interest.

“Brokers traditionally followed a suitability standard, which did not impose much scrutiny of revenue sharing. Regulation Best Interest strengthened the standard of conduct for brokers and is likely to affect revenue-sharing practices,” the report said.

Morningstar has sent the SEC a letter highlighting the different levels conflict that revenue-sharing can present in different mutual fund share classes.

“It seems to me from where I sit that the industry is taking this seriously and really looking at conflicts and looking at this program as a way to mitigate conflicts of interest,” Szapiro said.