Compensation

What this video covers

• Why asset-based fees align adviser-client interests, and why commission-based pay creates a conflict of interest (more trades equal more pay)
• The difference between a wrap fee program brochure and the standard Form ADV Part 2A, and why the wrap brochure replaces rather than accompanies it
• Why recommending a wrap fee still requires suitability analysis: a buy-and-hold investor may pay more bundled than per-trade
• The two dollar thresholds that define a qualified client ($1.4 million assets under management immediately after contract, or $2.7 million net worth excluding primary residence) and what asymmetric versus symmetrical performance fees allow
• Fulcrum fees: they apply to registered investment companies AND any client with over $1 million under contract, not just mutual funds
• Pay-to-play contribution limits: $350 per election if the contributor can vote for the official, $150 if not, and the two-year compensation ban for violations
• Soft dollar safe harbor: what counts as eligible research (research reports, analytical software, market data) versus ineligible items (office furniture, rent, computers)
• The distinction between written disclosure and client consent for third-party compensation conflicts