Caps put on the number of shares that advisers can sell to investors could in the end actually hurt them more, as the limits may encourage advisers to offer less suitable share classes as an alternative, according to a newly released white paper by Morningstar. The Chicago-based fund-tracker found that without the so-called “break-point rules,” investors would have actually have paid less in fees in B shares than A shares in 14% of the funds studied by Morningstar. The break-point rules were introduced to eliminate abusive sales practices by brokers, but observers confirm they may backfire on occasion.

“In some cases,” says Eric Brotman of Brotman Financial Group, “advisers are finding themselves hamstrung by the very same rules that are intended to protect the people they are trying to take care of.” To that, Mercer Bullard of Fund Democracy replies that the paper “does a disservice to investors,” for if brokers use this as an excuse to undo limits – implemented voluntarily by firms, “you will see a resurgence of abusive sales practices with respect to B shares.” The bottom line, says Bullard, is not to focus on the number of investors who would be hurt by the limits, but the larger number who can potentially be harmed without them.