Wednesday, December 12, 2012

FINRA Proposes Compensation Disclosure

In FINRA's continued quest for a role in the RIA segment, their 20-member board of governors voted on 12/10/12 to propose a rule that would require a registered representative that switches firms to disclose any compensation, bonus or other incentive received in the recruitment process.

This is important for the fiduciary movement, but is likely to result in continued departures from the brokerage firms. We expect significant pushback from member firms. RIAs must disclose the nature of ANY conflict of interest, including, but not limited to compensation from 3rd parties. However, they do not need to state specific dollar amounts. They are required to state the source and nature of any conflict and how they mitigate such conflict.

Financial Advisor magazine has good coverage on this topic (

We'll continue to keep you apprised on this proposal. Please share any thoughts or questions.


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