The mutual fund business is likely to undergo tremendous change in the years ahead, according to Don Putnam, co-founder of investment bank Putnam Lovell NBF Securities. In an interview with MarketWatch, Putnam said that in light of the changing regulatory environment and mounting conflict-of-interest concerns, the mutual fund industry is ripe for mergers and acquisitions.

"The test of the quality of the institution is going to be, 'How well we can be all things to our clients?'" Putnam said. He noted that there are two ongoing shifts that are likely to propel the fund industry towards consolidation. With regulatory scrutiny getting tighter in the U.S., Putnam said that the mutual fund business on its own is likely to become "less attractive, more expensive and dangerous."

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