The proposal, passed by FINRA on September 19, would require brokers to tell clients of any recruitment compensation they receive in connection with the switch, including bonuses, loans and transition assistance.
Customers will be told what the broker received in ranges, such as $100,000 to $500,000 or $500,000 to $1 million.
“Brokerages mostly backed the plan. Morgan Stanley and Merrill Lynch, the two biggest, as well as UBS AG and Wells Fargo & Co., said in March letters to Finra that the disclosure would help clients understand their financial advisers’ motives.”
Stifel Financial Corp., with more than 2,000 brokers, said in a letter that “ the proposal was anti-competitive and would discourage brokers from changing jobs even when that would be better for clients.”
David Sobel, chairman of the National Association of Independent Broker/Dealers, said “the bonuses don’t pose a conflict and that the rule is inconsistent because it doesn’t apply to retention payments designed to keep brokers from defecting.” Read more…