Compensation: Rapid Fire

What this video covers

• The two broker-dealer capacities: agent (commission, disclosed separately) versus principal (markup or markdown, embedded in price), and why both can never apply to one trade
• How the 5% policy works as a guideline rather than a hard ceiling, and the seven-factor fairness test
• Why a markdown is the firm's profit when buying from a customer, not a discount for the customer, and why disclosure never cures unfair pricing
• Front-end sales charge breakpoints, letters of intent (LOI) versus rights of accumulation, and the 0.25% line that kills a "no-load" claim
• The four obligations of Regulation Best Interest: Disclosure, Care, Conflict of Interest, and Compliance, and why sales contests tied to specific securities must be eliminated
• Soft dollar safe harbor coverage: research and brokerage qualify, but office rent, salaries, marketing, and security futures products do not
• Performance fee restrictions and the qualified client thresholds ($1,400,000 assets under management or $2,700,000 net worth excluding primary residence), plus the commission-splitting rule