FINRA Examines Rob-Advisory Programs for Conflicts of Interest

With the imminent release of the proposed ERISA fiduciary regulation in final form, many financial advisors are weighing the pros and cons of delivering participant investment advice.

Does the “Best Interest Contract Exemption” impose costs and responsibilities that are too onerous for my firm?   Should I move from a varying commission- based compensation structure to a level fee payout?

For many broker-dealer firms, there may be a viable path forward by going to a robo-advisory program that incorporates the statutory computer model exemption under ERISA Section 408(b)(14) and (g)(1) or its predecessor, the SunAmerica advisory opinion.

However, be advised that FINRA is also looking closely at robo-advisory programs and issued a report on March 15, 2016 (Report on Digital Investment Advice, the “Report”), dealing with its perspective on suitability and conflicts of interest where digital investment advice tools are used to render investment advice.

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