The SEC recently put out an Investor Bulletin on wrap fees. Although this guidance is steered toward consumers, there are lessons to be learned by firms who offer such programs.
The SEC specifically posed the question of what does the fee cover. Included in that list of possibilities are:
- Investment advice.
- Brokerage costs.
- Administrative expenses.
- Other fees and expenses like those associated with mutual funds.
- Third party service provider costs and trading away.
So what can a firm take away from this bulletin? For one, now is as good a time as any to make sure that your wrap fee disclosures are complete and up to date.
In the first instance, do you even have written disclosures that you can provide customers? If you do, do they detail the services being provided and the fees being charged. If the answer to either question is no, you have work to do.