Streamlined brokerage platforms may be the way of the future, and the Department of Labor (DoL) may be at least partly to blame.

Daniel R. Kleinman Morgan Lewis PartnerE

That's one prediction offered up by both panelists and fundster attendees today at the Investment Company Institute's (ICI's) special "Assessing the New DOL Fiduciary Rule: Policy and Practical Challenges" conference at the JW Marriott in Washington, D.C. Fundsters wonder if broker-dealers facing the new fiduciary rule will try to better levelize their compensation by, among other things, levelizing platform fees for mutual funds.

Dan Kleinman, a partner at Morgan Lewis Bockius and a panelist in the one-day conference's "Fund Distribution Under New Fiduciary Paradigm" panel, says that B-Ds would like to simply say, "if you'd like to be on our platform, you need to pay X." No more X for you, and Y for you, and just A for you because you're extra special or popular or will do lots of other support. Other fundsters in attendance tell MFWire that they, too, are hearing B-D interest in such an idea.

Another possibility, addressed by Kleinman and fellow panelist Yaqub Ahmed (head of defined contribution - U.S. at Franklin Templeton), is that some B-Ds might just use the most stripped-down share classes possible and then layer on their own fees on top.

"The broker-dealers are trying to move to a model where they're completely level at the firm level but also at the advisor level," says Joseph Lai, associate partner at McKinsey. And the DoL regs include a "pretty expansive definition of what those third-party payments include", such as conference sponsorships, seminars, and of course revenue sharing.

John McDonough, president of OppenheimerFunds Distributor, moderated the panel discussion.

The good and bad news is that it's early days. That means no one really has any answers or certainty yet.

"It is a mad scramble right now," Ahmed says.

Yet that scramble can also be an opportunity, Ahmed says, for the asset managers will to step up and help out their key B-D allies by making "calculated risks."

"Talk to your clients right now," Ahmed says. "We're very focused on our platform team. The platform inventory at the large B-Ds is likely to shrink over time."

"Reach out to your intermediaries," Kleinman says. "Ask them what they're doing. Tell them that you want to be a partner." 

Correction: A prior version of this story gave the wrong title for Yaqub Ahmed. He is head of defined contribution - U.S. for Franklin Templeton.

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