Sponsored by TradingFront
Commission-free trading has become the status quo in the investment industry. Yet is “free” truly free? The answer, we believe, is no, when considering the hidden ways these brokers make up for zero commissions through fiduciarily-questionable revenue generating practices.
This white paper focuses on three such practices we have observed in the brokerage industry:
- Revenue sharing arrangements with mutual funds
- The harvesting of client cash assets through bank sweep programs
- The increasing prevalence of so-called “payment for order flow,” whereby brokerages sell their client’ orders to institutional traders
We believe it is clear that investors are paying, quite dearly, for free trading.
We hope to shed light on these trends and industry practices, and provide the counter case that pricing for brokerage services should be more direct and transparent, so that investors know exactly what services they are receiving and paying for in a fiduciary model that is embraced by the financial services’ industry leaders – independent registered investment advisors (RIAs).
Register to download.