FINRA Opens Comment Period On Compensation Disclosure Rule That Would Include Disclosing Signing Bonuses To Clients

Tuesday, January 08, 2013 08:13
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FINRA Opens Comment Period On Compensation Disclosure Rule That Would Include Disclosing Signing Bonuses To Clients

Tags: fiduciaries | FINRA | registered reps

FINRA has opened a comment period on its proposed rule mandating disclosure of broker compensation including bonuses.
 
Member firms will be required to disclose financial incentives they offer recruits before they join the firm. The disclosure must be made before the recruit’s client accounts are transferred.
 
The rule is titled Regulatory Notice 13-02 and comments must be received by March 5.

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Wirehouses are the primary FINRA firms who offer large signing bonuses to recruits to join their companies.
 
The bonuses are typically not disclosed and clients of the recruit are given some other explanation for the move.
 
FINRA feels the signing bonuses represent a conflict of interest and clients should be informed of the bonus incentives as well as all forms of broker compensation.
 
The new rule is also being viewed as a move toward treating brokers as fiduciaries, which brings to mind these questions:
 
Should brokers be treated as fiduciaries or should the traditional separation of services between brokers and advisors be restored?
 
Would the traditional broker model still have a place in today's environment?
 
You can make your comments here, either online or by mailing them to the address provided.

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