9 more firms adopt fee disclosure template for clients

The fee schedule, developed by state regulators and other groups, details account maintenance and cash management charges

May 9, 2017 @ 2:04 pm

By Mark Schoeff Jr.

Nine financial firms agreed Tuesday to adopt a fee disclosure template developed by state regulators and other groups that is designed to help clients understand and compare service and maintenance costs.

The North American Securities Administrators Association, which represents state regulators, said Fidelity Investments, Prudential Financial Inc., 1st Global, Cambridge Investment Research Inc., Commonwealth Financial Network, FSC Securities Corp., Royal Alliance Associates Inc., SagePoint Financial Inc. and Woodbury Financial Services Inc. will begin using the fee disclosure schedule.

Those firms join LPL Financial, Morgan Stanley, Prospera Financial Services and Signator Investors Inc., which were already using the template and helped design it. Other groups that participated in putting together the model disclosure were the Financial Industry Regulatory Authority Inc., the Securities Industry and Financial Markets Association and the Financial Services Institute.

"This collaborative initiative between regulators and industry helps increase the transparency of fee disclosure for investors," Mike Rothman, NASAA president and Minnesota Commissioner of Commerce, said in a statement. "I commend all firms that have taken the initiative to help bring uniformity to the disclosure of broker-dealer service and maintenance-related fees, and I encourage the implementation of this sound business practice to others to provide the same level of disclosure to their clients."

Knut Rostad, president of the Institute for the Fiduciary Standard, gave NASAA credit for helping illuminate fees.

"For firms where this is not being done, this is a solid step forward," Mr. Rostad said.

A sample template of the fee schedule posted on the NASAA website covers more than a dozen fees related to account maintenance, such as an annual account fee, Roth IRA conversion charge and miscellaneous expenses, and cash-management services, such as ATM, checking and credit-card fees. The form does not include commissions or third-party payments.

The fee disclosure model was first released in 2015 by a working group NASAA formed a year earlier, after a study found "wide disparity" in the way brokers told their clients about fees.

"The working group's goal is to develop meaningful account and service fee disclosure and transparency," NASAA said in a statement. "They must be simple to read, easily accessible and helpful for retail investors to understand and compare fees."

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