Massachusetts Proposes Detailed Fee-Disclosure for Advisors
Massachusetts on Wednesday proposed requiring state-registered investment advisers to create a detailed table of fees they charge directly and indirectly, and send them to existing and new clients.
Secretary of the Commonwealth William Galvin, who opened the proposed regulation for informal comment, said more detailed disclosure of fees can help consumers understand the myriad of fees they pay today.
“It is no longer the case that advisers only charge their clients a fee for assets under management,” Galvin said in a prepared statement. “It is not uncommon for consumers today to pay different types of fees for advisory services, including retainer fees, subscription fees or third-party robo advisory fees.”
The Securities and Exchange Commission separately on Wednesday said in its annual examination priorities letter that it would be focused on whether advisors are properly calculating and disclosing fees, particularly on advisory accounts.
“Examiners will review, among other things, whether fees and expenses are calculated and charged in accordance with the disclosures provided to investors,” the SEC wrote in the letter. “Examiners will also review fees charged to advisory accounts, particularly where the fee is dependent on the value of the account, to assess whether assets are valued in accordance with investor agreements, disclosures, and the firm’s policies and procedures.”
In addition to its goal of promoting fee “transparency,” Massachusetts believes a fee table would help consumers comparison-shop among advisors, Galvin said.
The proposed fee table would be required only for RIAs, and not for advisors who operate solely as Finra-licensed registered representatives, said Debra O’Malley, a spokeswoman for Galvin.
Investment advisers are currently required to annually update their ADV forms filed with the Securities and Exchange Commission, but the Massachusetts proposal would require much more detailed information on fees charged.
A uniform table would also help consumers understand what they are paying for since “investment advisers who charge a fee based on a percentage of assets under management vary in the extent of services that they offer to clients,” the state said.
“While some investment advisers provide only portfolio management services, other investment advisers include a range of financial planning services within their assets-under-management fee. Clients should be aware of the investment adviser’s scope of services, including whether financial planning services are included in the fee arrangement or are considered an additional service for which they are charged separately.”
Massachusetts has not yet set a deadline for receiving comments. Its securities division expects to do that in coming days when it issues a formal solicitation of comments under the state’s administrative act, it said in a news release.
“Substantive input and comments from stakeholders will help assist the Division in considering the feasibility of implementing a fee table as well as the fee table’s content and structure,” the state wrote in its comment solicitation request.
Have an idea, how about having the attorneys who come up with this stuff, start disclosing all of their fee’s and while they are at it have them disclose all their personal information as well. This would include the Secretary of the Commonwealth William Galvin as well as the members of Finra and the SEC, or is full disclosure for the financial planning community only?
Funny how all of these individual are jumping up and down about full disclosure, and yet are not willing to step up themselves. Come to think of it how about we start requiring this of our Dentist, Doctors Congressmen, especially those in Congress and Senate, after all look how wealth they become at a job that pays $174,000 per yr.
Very easy to throw rock, but they really should start looking at themselves in the mirror.
The amount of sarcasm and venom in your comment suggests that you have a lot of skeletons in the closet and really don’t want anyone looking to closely into how you do business. If the inner workings of the power brokerage industry saw the light of day, you would have no moral high ground to claim and the end use customers would be outraged.
Unethical brokers are the ones to blame for their impending regulation and ultimate disintermediation.
Don’s sarcastic comments dont suggest skeletons Father Time. I think it suggest what he’s experenced in dealing with FINRA or what happens and how much it costs to defend your name and reputation or what happens when your vindicated two years later. Nah, no skeletons for that guy, just a healthy amount of undeserved hurt and pain likely started by someone other than FINRA. classic example of child dialing 911 and yelling FIRE, and 5 minutes later the FINRA Fire Dept showing up with every tool and new toy in-hand excited to play fireman. They proceed to level the house without really ever checking for smoke or flames. The home owner left with his mouth open as the mighty FINRA Firemen look back at the poor guy and his destroyed home shrugging their shoulders and saying “hey its not our fault, get that kid. he did it.” as they proudly drive back to their house. You want to know who you are Father Time? the guy laughing and clapping as the firemen dismantled the home repeating “serves him right to have a 5 yr old do something as horrible as his kid did with that fake 911 call. That kid needs to be put in jail and his parents beheaded. At once!!!!
you tool