Fee disclosure may be ready to hit IRAs. After the recent GAO report that some IRA providers made misleading claims about fees to undercover GAO reps who were posing as people with rollovers, a few Senators called for further investigation.
Now, FINRA has weighed in with a recent Notice about misleading advertisements by members about IRA fees. In the notice, FINRA stated: “FINRA is concerned… that some broker-dealers’ communications that discuss fees may not be fair and balanced, and could be misleading.”
Specifically, FINRA is concerned what it characterized as overly broad language about no-fee or “free IRAs” which leave out the fact that there may be fees for opening, maintaining and closing accounts, fees for ancillary services as well as fees imbedded in the products. Highlighting services that are provided free of charge without listing services that are charged was also cited as a concern.
FINRA provided the following example:
“A headline statement to the effect that a firm does not charge annual maintenance fees should include an explanation in close proximity to the headline of the conditions associated with the offer and the other fees that would apply.”
Will IRAs get their own version of 404(a)(5) participant disclosure? Stay tuned.
