Series 63: Soft-Dollar Arrangements

Soft-Dollar Arrangements

Broker-dealers may offer free access to soft dollar benefits to investment advisers who direct client transactions through said broker-dealers. These products are designed to help the adviser build the business or learn more about certain products. These benefits ultimately have a value and a cost for which an investment adviser did not have to pay out of pocket. That represents an incentive to choose one broker-dealer’s services over another and, in turn, a conflict of interest, since the cost for these services is ultimately reflected in the commissions paid by the investment adviser’s clients.

To protect against abuse and conflicts of interest, the SEC has determined that only certain services that directly benefit a firm’s clients can be accepted on a soft-dollar basis. These include:

• • Research publicati