A proposal advanced Monday by Wall Street's industry-funded regulator that would require greater compensation disclosure has exposed a chasm in the advisory industry, pitting smaller broker-dealers against large wirehouses and independent advisers.
A draft of the rule, which the Financial Industry Regulatory Authority Inc. has filed with the Securities and Exchange Commission, would require brokers to disclose recruitment incentives over $100,000 to clients and could lead to some stabilization or tapering of large recruitment packages, according to industry experts.
That fact could be a huge boon to wirehouses, which offer some of the largest incentive packages on Wall Street, but also to registered investment advisory firms that many broker-dealers and compliance lawyers say would have less of a compliance burden.
“It certainly could create a very interesting situation at firms where it could actually drive the industry toward reducing those payments,” said Alois Pirker, a research director for Aite Group's wealth management consulting group. “Ultimately, once it's out in the open, firms could have a hard time going way beyond the highest payments.”
(Don't miss: Finra bonus disclosure rule goes to the SEC)
After Finra's board approved sending a rule to the Securities and Exchange Commission for its approval last September, the regulator saw a raft of comments from industry executives, lawyers and advisers.
WIREHOUSE SUPPORT
The four wirehouses, which offer some of the largest incentive packages on Wall Street, voiced their support. At the same time, many of their smaller-tier competitors warned the regulatory agency that the disclosures could create a new competitive disadvantage for the brokerage firms against RIAs.
“Because of the regulatory gap that exist
No comments:
Post a Comment