Practical Application

One of Amy Adams’s early mentors was Dianne, an industry veteran. Dianne had worked in the securities industry since the mid-1970s when the securities industry was deregulated.

With the increase in self-service brokerages offering discounted commissions and no-load mutual funds, Dianne advised Amy to create as many different sources of revenue as possible. She especially encouraged Amy to try to begin opening more fee-based advisory accounts and move away from acting only as a commission-based agent.

As Amy began to design a new marketing campaign incorporating Dianne’s advice, her firm’s compliance department reminded Amy that it would be unethical to charge both commissions and an investment advisory fee without providing a written disclosure to the client that she’s doing so. They also reminded her that any fees she charged must be fair and reasonable c