NU Online News Service, Nov. 4, 2003, 5:11 p.m. EST – The National Association of Securities Dealers, New York, has put out a notice warning member securities firms against assuming that fee-based accounts are appropriate for all customers.
A firm should consider many factors before placing a customer in a fee-based program, the NASD says.
Traditionally, most securities customers paid commissions rather than fees. Today, many customers pay their advisors fixed fees, or fees based on a percentage of assets under management.
“Customers may have reasons, unrelated to the cost structure of fee-based accounts, for deciding to handle their investment services on that basis, but all material components of the fee-based accounts, including the fee schedule, services provided and the fact that the program may cost more or less than paying for the services separately must be disclosed to the customer,” the NASD says in an announcement discussing the notice.