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Margaret Kirch Cohenmargaret.cohen@morningstar.com
Morningstar Launches Advisor Compliance Tools - New Tools Help Advisors Counsel Investors on Mutual Fund Breakpoint Discounts

CHICAGO, Jan. 24, 2005 – Morningstar today announced the launch of a new set of Web-based tools that will help brokerage firms and their advisors comply with federal regulations around mutual fund breakpoints, and will help ensure that investors understand and receive mutual fund breakpoint discounts for which they qualify.

Morningstar’s first offering under its new Advisor Compliance Tools is Compliance Data DigestSM, a Web-based application for advisors. Compliance Data Digest centralizes in a consistent and easily accessible format the information, including rights of accumulation, that advisors need to determine if their clients are entitled to a breakpoint discount on a fund’s “load” (sales charge). 

Advisors are required, under federal regulations, to consider breakpoint discounts when proposing the purchase of mutual funds containing sales loads. “Without a centralized source for this data, brokerage firms have either been developing their own systems or having their advisors search each individual fund’s prospectus or Statement of Additional Information, and then attempt to interpret each fund’s unique policies,” said Joe Mansueto, Morningstar’s chairman and chief executive officer.

For all of the approximately 240 fund families offering load funds, Compliance Data Digest contains hard-to-find data on breakpoints, including rights of accumulation, letters of intent, share-class limits, and other factors that advisors need to consider before advising clients on the purchase of a mutual fund with a sales charge. The tool enables advisors to quickly and easily find and review this information. 

Morningstar also offers to brokerage firms all of the data contained in Compliance Data Digest in an XML-based datafeed, which can be used to power a firm’s order-entry systems or advisor/client Web sites.

Also this year, Morningstar plans to introduce another Advisor Compliance Tool called Breakpoints AnalyzerSM – an application that advisors can use to review mutual fund holdings with clients, apply rights-of-accumulation rules, and assess share-class suitability. Breakpoints Analyzer will generate a report that explains factors that impact the sales charges investors will pay, to help them feel confident that their unique situation has been more completely and accurately reflected. 

“Historically, the rights of accumulation issue has been a complex and difficult one for advisors to discuss with clients, because of the breadth of information involved,” Mansueto said. “Morningstar’s new tools can make it easier for advisors to talk with their clients about relevant assets that can help them qualify for breakpoints, and then determine the most appropriate share class for the investor.”

About Morningstar, Inc.
Morningstar, Inc. is a leading provider of independent investment research in the United States and in major international markets. Morningstar tracks more than 100,000 investment offerings, including 7,000 stocks, 16,000 mutual fund share classes, and similar vehicles.  Through its Principia® and Advisor Workstation® products, Morningstar has relationships with more than 100,000 financial advisors.  The company has operations in 16 countries.

 

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