Brokerage Firms Under Investigation for Incentive-Based Product Sales - NBC10 Boston

Brokerage Firms Under Investigation for Incentive-Based Product Sales

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    Massachusetts' securities regulator is investigating three brokerage firms following a report that their financial advisers were paid to get customers to buy more expensive products. 

    Secretary of the Commonwealth William Gavin’s office confirmed to NBC10 Boston that letters were sent to Fidelity, Charles Schwab Corp. and TD Ameritrade. These letters asked the businesses for information regarding how they pay their financial advisers. 

    The Wall Street Journal first reported the investigation and interviewed dozens of former employees. Almost everyone interviewed reported they were encouraged to sell products that would end up costing the customer more. 

    A former employee of Fidelity told the WSJ that the higher-priced products would earn a larger commission for advisers, and that yearly bonuses also incentivized the push for bigger sales. 

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    In an email to the Boston Business Journal, Debra O’Malley, a spokeswoman for Galvin said in part, "In addition, the division is concerned with whether the firms disclose the compensation tied to these products and services as there may be material conflicts of interest involved." 

    The firms responded to the WSJ, saying that measures are in place to make sure advisers don’t push any unnecessary product on a customer.  


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