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Broker-Dealers Adopting NASAA Fee Disclosure Model

The North American Securities Administrators Association announced that nine more securities firms have agreed to provide their clients with a fee disclosure schedule based on a model developed by NASAA’s model fee disclosure working group.

The model fee disclosure schedule allows investors compare broker-dealer miscellaneous account and service fees and provides guidelines to make fee disclosure accessible and transparent.

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. agreed to use the fee disclosure schedule.

LPL Financial LLC, Morgan Stanley Smith Barney LLC, Prospera Financial Services, and Signator Investors Inc. previously agreed to use the fee schedule.

NASAA’s working group said that its goal is to develop meaningful account and service fee disclosure and transparency – noting that the disclosure must be simple to read, easily accessible and helpful for retail investors to understand and compare fees.

“This collaborative initiative between regulators and industry helps increase the transparency of fee disclosure for investors,” said Mike Rothman, NASAA president and Minnesota commissioner of commerce. “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.”

The working group consisted of state securities regulators, representatives of the Financial Industry Regulatory Authority, the Securities Industry and Financial Markets Association, the Financial Services Institute, LPL Financial LLC, Morgan Stanley Smith Barney LLC, Prospera Financial Services, and Signator Investors Inc.

The group was formed in 2014 following the release of a study by NASAA’s broker-dealer section that uncovered a wide disparity in how broker-dealers disclose the fees that they charge customers. In 2015, NASAA released the results of a national opinion research poll that found investor confusion about the fees charged by brokerage firms to service and maintain their accounts.

Organized in 1919, the North American Securities Administrators Association is an investor advocacy association whose membership consists of 67 state, provincial, and territorial securities administrators in the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Canada, and Mexico.

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