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And it is likely to get even worse. The U.S. Department of Labor’s conflict-of-interest rule will require that advisers put client interests first in picking investment vehicles. This rule, which goes into effect in April, is the reason BlackRock gave last week for slashing its fees -- again -- on ETFs to near-free levels. BlackRock is cannibalizing its business to survive in the low-cost, post-DOL, Vanguardian future.
This accelerating shift to low costs is sure to be felt across the financial world because fees earned off of retail products produce an outsized portion of the industry’s revenue. So the ripple effects are big. And when asset managers make less money, so do the Wall Street banks they trade with, the back-office providers they use, their data vendors, PR firms, and so on.
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