As legislators and regulators prepare to adopt more stringent regulation governing the mutual fund industry, some investment advisors will benefit from such rule changes while others will be harmed, according to a report published recently by
Proposed legislation will have the most significant effect on the industry sector, with varying outcomes for investment advisors depending on their overall credit profile, the report said.
"Firms with strong performance records, good compliance risk management systems, sufficient asset under management to absorb additional expenses, and the ability to generate new businesses independently will be best equipped to endure a stricter regulatory framework," said David Spring, director of the Chicago-based ratings agency.
"On the other hand, firms that rely heavily on retail mutual fund management, have poor performance records, generate most new business through third-party channels, or have weak compliance management systems will be more vulnerable."
The
Still, Fitch believes that the reform legislation proposed in the
"Nonetheless, significant regulatory and legislative action is likely and investors should consider the direction in which current proposals and bills point."