Guidance on Conflicts of Interest for Investment Advisers

January-February 2015Articles Practical Compliance & Risk Management for the Securities Industry


Conflicts of interest arise in any fiduciary relationship and perhaps no more so than in the financial services industry. In October 2013, FINRA released a report on the conflicts of interest in the retail broker-dealer contracts. The report focused on identifying and managing conflicts in a firm’s three critical areas: (1) enterprise level frameworks to identify and manage conflicts; (2) approaches to handling conflicts of interest; and (3) compensation for associated persons. The report provides retail broker-dealers with summaries of how the industry manages and mitigates conflicts of interest. While FINRA has no authority over investment advisers, the conflicts that arise in retail broker-dealer context are substantially similar to the conflicts that arise for investment advisers.

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