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DOL Fiduciary News: July 6, 2017(1)

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Raymond James Financial Moving To Single Payout Grid

Financial Advisor; July 5, 2017

In response to the DOL fiduciary rule, Raymond James Financial Services will be changing its compensation plan so that all production is paid off of one grid. The move comes at a time when many broker-dealers are wrestling with the issue of broker payouts in expectation that they will face more scrutiny in a post-DOL world.

Next year, the independent contractor unit of Raymond James Financial will switch to a single payout grid that starts at 81 percent for trailing 12-month branch production up to $500,000, topping out at 90 percent at the $10 million-plus level.

Depending on product mix and production, the changes could represent a cut in pay for some advisors. Currently, mutual fund commissions are paid out at 90 percent with a ticket charge of $26. Equities earn 85 percent with a ticket charge of $22 plus 1.5 cents per share, and insurance sales get 85 percent with a ticket charge of $49. Rep-managed fee accounts now earn an advisor a payout of 85 percent or higher.

As part of the changes next year, RJFS will switch to a flat $25 ticket charge on all products.

Justice Department: DOL Fiduciary Rule Should Be Upheld—Just Not the Class-Action Part

Wealth Management; July 5, 2017

The U.S. Justice Department filed a court brief Monday, arguing that the Department of Labor’s fiduciary rule should be upheld, with the exception of allowing class-action lawsuits to be filed under the best-interest contract exemption.

For supporters of the rule, that private right of action—the ability of clients to file class-action lawsuits against firms that don't follow the rule—is fundamental to ensuring the rule's impact. For detractors, it is the primary point of contention, opening the door, they say, for frivolous but costly litigation as tort attorneys target broker/dealers holding individual retirement accounts.

The brief was filed in the Court of Appeals, where the U.S. Chamber of Commerce and others have appealed a district judge’s decision to side with the DOL.

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