In the world of investment advisors, there exists certain kinds of pay that earn the name "conflicted compensation." We know...it sounds like a paycheck that needs a psychiatrist. Rather, these represent kinds of compensation that might cause some conflict of interest for the investment advisor.
For instance, if an advisor overseeing your retirement account got paid each time they made a transaction, that could lead to a conflict. The advisor would have an incentive to make transactions and might be tempted to churn things a bit just to run up these kinds of payments.
So, in general, "conflicted compensation" is banned by industry standards. However, an exception can be made if the advisor gets a best-interest contract exemption. The goal of the rule is to allow other types of financial professionals, like broker dealers, to participate in retirement investing.
If certain requirements are met, and if the investor signs a document allowing it, a BICE can open up certain kinds of commissions and fees that would otherwise be considered inappropriate.
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Finance: What is a Comfort Letter?6 Views
Finance a la shmoop what is a comfort letter? S....See the smooth curves there is [An S letter appears]
that comforting okay okay comfort letter is a letter
this kind of letter written by an expert usually someone like an auditor or a tax [Expert appears with comfort letter]
attorney in one form or another who has done deep due diligence into a company
looked at myriad details and data and volume counts of plastic cubes in their
inventory and then they've looked at their distribution contracts
you know with truckers and retail stores and drone deliverers and then they've [Drone flying in the air]
looked at their bank accounts both the onshore ones and the offshore ones that
you know they don't really like to talk about and then about 87 ish other things
that all those people look at and then they write a letter like an actual
letter which is usually given to the Board of Directors or an acquirer or
the investigating party whoever that is and that letter states that what the
company says it has or does is in fact what it has or does which is a good [Man discussing comfort letters]
thing to know so this letter well it just gives comfort to everyone
the only challenge can be you know trying not to become too comfortable [Man working near a waterfall]
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