Revenue Gravity: Why Financial Products Almost Never Die

Once a financial product begins generating reliable fees, it becomes remarkably difficult to make it disappear.

In most industries, outdated products fade quickly. Technology improves, competitors build something better, and the market moves on. Finance behaves differently. Here, products tend to linger. Sometimes for decades, even after the original friction they solved has largely disappeared.

Revenue Gravity

Inside the industry, there is an unspoken force that explains why. You could call it revenue gravity.

The moment a product begins producing steady income, an entire structure forms around it. Forecasts assume its continuation. Teams maintain it. Distribution channels rely on it. Clients become accustomed to it. Over time the product shifts from something that was introduced to solve a problem into something that simply exists as part of the system.

And systems rarely get dismantled voluntarily.

This is not the result of bad actors or malicious intent. It is a function of incentives. Removing a product reduces revenue, creates operational work, and requires explaining the decision to stakeholders who may see no urgent reason for change.

So the product continues, even as the environment around it evolves.

We've seen this before

A clear example comes from mutual fund distribution.

For decades, mutual funds were commonly sold through commission-based financial advice. Brokers were compensated through sales loads and distribution fees embedded in certain fund share classes.

A-share mutual funds were designed for that system.

These share classes typically included a front-end sales charge and ongoing distribution fees. When funds were primarily distributed through broker relationships, the structure served a clear purpose. The fees compensated the intermediary responsible for introducing the investment to the client.

But the distribution landscape gradually changed. Fee-based advisory models expanded. Online brokerages made direct investing easier. Platforms emerged that allowed investors to access funds without traditional sales loads.

The infrastructure improved.

Investors could increasingly access the same underlying funds without the original distribution costs. Yet A-share share classes remained widely used.

The issue was not that A-share funds were inherently flawed. In the distribution system that existed when they were introduced, they served a logical role, and they gathered momentum. That momentum is rarely challenged.

Which leads to a simple question

Asked honestly, that question strips away years of accumulated assumptions. It forces a product to be evaluated in the present market environment rather than the environment it was originally designed for.

Would it still improve outcomes for investors?

Would it make something meaningfully easier or more efficient?

Or would it simply recreate a layer that no longer needs to be there?

Most institutions rarely apply this test. Not because the question lacks merit, but because the incentives push in the opposite direction. Existing revenue streams carry weight, and sunsetting a product requires giving them up. The easier path is continuation.

But institutions that genuinely align their incentives with their customers eventually have to apply a higher standard. Products should exist because they deliver a clear advantage to the people using them, not because they have always been there.