Displaying items by tag: conflicts of interest

Wednesday, 14 February 2018 09:51

The SEC’s New Free Pass on Conflicts of Interest

(Washington)

The SEC says that a lack of fee disclosures related to conflicts of interest may be rife across the wealth management industry. Now the SEC is giving a free pass to those that have failed to disclose. So long as investors come clean and give money back to investors, they won’t be punished. The biggest abuses seem to be in the lack of disclosure of mutual fund fees, which goes against the rules laid out in the Investment Advisers Act of 1940. Those who come forward will not face civil monetary penalties, but that special treatment will only be for those who come forward voluntarily.


FINSUM: Hard to say how big of a problem this is. But it does sound like this might be a good way to clean up the issue quickly.

Published in Wealth Management
Thursday, 11 January 2018 11:08

Big Conflicts of Interest at Discount Brokerages

(New York)

The big discount brokerages might be poised for an ugly PR nightmare. In an expose type article, the WSJ has highlighted how big discount brokers like TD Ameritrade and Fidelity hide the fact that their account managers have conflicts of interest. Such managers often tell clients they don’t get paid on commission and therefore don’t have conflicts of interest. Yet in reality they do have incentive pay that biases their advice to steer clients into more expensive products. One former manager from Fidelity comments that “You’re omitting certain facts that the client would probably appreciate understanding before you launch into a sales pitch on why you think this product is better”.


FINSUM: This is definitely something that those who use discount brokerages should be aware of. It remains to be seen what the fallout from this expose might be.

Published in Wealth Management

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