February 15, 2018By Mark Schoeff Jr. Investment News
A pending Finra proposal to ease the requirement that brokerages supervise their representatives’ work with unaffiliated registered investment advisers sounds like regulatory relief. But some brokerages are worried about the price for losing oversight of outside business activities.
Monitoring an unrelated third-party adviser can be a hassle, but it also means broker-dealers can take a cut of their affiliates’ RIA revenue, usually about 5%.
The Financial Industry Regulatory Authority Inc. board advanced the proposal at its December meeting, but the agency has not yet released a rule proposal. Depending how it’s written, obviating the need to supervise RIA work also eliminates the need to charge for that service.
As more hybrid advisers shift from commission-based revenue to fee-based revenue,