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Broker-dealers eye level commissions to reduce risk under DOL fiduciary rule

July 14, 2016

 

 


Broker-dealers eye level commissions to reduce risk under DOL fiduciary rule

Such a strategy is meant to reduce the appearance of a conflict of interest when using commission products in retirement accounts

Jul 11, 2016 @ 12:27 pm | By Greg Iacurci | Investment News

Broker-dealer executives are strongly considering a strategy whereby investment products with similar characteristics would have the same commission schedule as a way to reduce risk under a new Labor Department rule that raises investment advice standards in retirement accounts.

While the Department of Labor’s fiduciary rule allows brokerage firms and their advisers to receive forms of variable compensation, such as 12b-1 fees and commissions, some executives want to make commission payouts as similar as possible among like products to avoid the appearance of a conflict of interest when an adviser makes an investment recommendation.

Such a practice would be a departure from the way broker-dealers currently conduct business, whereby similar investment products could offer a fairly wide range of different commission payouts.

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Derek Hayes
Blue Vault's Services
April 14, 2016

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