Regulatory uncertainty and marketplace confusion are certain by-products of a federal appeals court’s split decision to overturn the SEC’s controversial fee-based brokerage account rule. The so-called “Merrill Rule” exempted brokerage firms that charge asset-based fees from investment advisory regulations under specified conditions.

In deciding not to appeal the decision, the SEC noted that it would consider other steps to respond to the decision and the issues raised on both sides of the debate over the rule. Future rulemaking to clarify the impact of the rule and provide for an orderly transition is a virtual certainty.

With many firms’ having previously shifted customers into fee-based accounts, the industry is clamoring for guidance on how best to proceed going forward. A major question is how to handle the one million investors with nearly $300 billion in brokerage fee-based accounts. These accounts now make up about 20% of all retail brokerage accounts.

Currently, firms’ are considering transitioning their fee-based brokerage accounts to either commission-based accounts or converting them to advisory accounts. The SEC has requested a 120-day transition period from the court.

Absent any changes, governing law will revert to brokers who provide advisory services being exempt from the Advisers Act if they do not charge special compensation and the advisory services they provide are solely incidental to their brokerage services.

This 90-minute CD-Rom will help you adjust for the future in the context of such a dynamic environment.

You will learn about:

• The restructuring options for brokerage and advisory products and the related challenges;
  
  
• How dual registrants or separate licensed entities should react;
  What to do when it comes to keeping the same personnel with IAA licenses;
  
  
• What to do when it comes to keeping the same personnel with IAA licenses;
  
  
• How to handle compliance with the additional Advisers Act requirements (e.g., principal trades);
  
  
• What changes and what stays the same with product supervision and surveillance;
  
  
• How to tackle suitability challenges such as low velocity;
  
  
• Marketing and account documentation standards: How are they the same and how are they different from brokerage practice;
  
  
• ERISA fiduciary standards;
  
  
• Alternatives for structuring brokerage products without special compensation; and
  
  
• How to educate investors on the differences between investment advisers and broker-dealers and changes in the product.

The SEC will continue to study the IA/BD issue and will release a report on marketing practices of brokers and advisers by year’s end. Our panel will also touch on the possible outcomes from the study.