Pershing, a BNY Mellon company, says it has released a two-part series on fiduciary and compensation compliance challenges – Conflicts in a Rapidly Changing Fiduciary Landscape – developed in collaboration with Groom Law Group.
It says the series addresses the unique challenges for broker-dealers and hybrid firms and reviews the current compensation practices that may create conflicts of interest for each business model respectively. The series also discusses potential compliance practices each type of firm can put in place to identify and address potential conflicts between the standards of care and the manner in which the firm or its representatives are compensated.
Part One – A Focus on Broker-Dealer Challenges discusses broker-dealer practices that may create potential conflicts including 12b-1 fees received as compensation for sales resulting from recommendations of mutual funds to clients, revenue sharing payments, transaction fee and no-transaction-fee (NTF) funds, and recommendations on IRAs as well as ERISA plans.
Part Two – A Focus on Dually Registered or “Hybrid” Challenges looks at the unique compensation-related conflicts that hybrid firms face. Hybrid firms will need to carefully evaluate revenue streams that might be available as a broker-dealer.