Series 65: Soft Dollar Arrangements

Soft Dollar Arrangements

Broker-dealers may offer free access to “soft dollar” benefits (examples follow) to investment advisers who direct client transactions through them. Such products help the adviser serve the customer. These soft dollar products and services may help the investment adviser to choose one broker-dealer’s services over another and, thus, represent a conflict of interest, since the cost for these products and 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 publications
• • Trade execution
• • Electronic service