Three of the major wirehouses—Merrill Lynch, Morgan Stanley and UBS—have given their OK to the Financial Industry Regulatory Authority’s plan to require that brokers’ recruitment compensation be disclosed when they switch firms.
Merrill Lynch and UBS weighed in late on March 5, the day the comment period expired on FINRA’s request for comment under Regulatory Notice 13-02, while Morgan Stanley didn’t comment until Monday.
Merrill told FINRA that “disclosure of enhanced compensation makes investors aware of potential conflicts, and, through this transparency, can lead to enhanced investor confidence and trust.”
Morgan Stanley Wealth Management said that it fully supported “the uniform disclosure of firms’ recruiting compensation arrangements as outline in [FINRA's] rule proposal.”
The Securities Industry and Financial Markets Association told FINRA on March 5 that brokers should only be required to disclose their recruitment compensation packages to clients when there is a potential conflict of interest.
Securities lawyer Patrick Burns (right) told AdvisorOne in a previous interview that “with the support of SIFMA,” FINRA’s “proposal’s chances of becoming a new rule seem to be a done deal.”
Now that the wirehouses have weighed with their support, “I don’t see why [a rule] won’t move forward,” Burns told AdvisorOne on Thursday.