Catching Up with the Law: How TPMs are coping with the Merrill Lynch Exemption.

Bank Investment Consultant, February, 2006

Banks look to third-party marketers (TPMs) to limit their own compliance liability, especially considering the potential fallout from the passage of the so-called Merrill Rule, officially known as the Merrill Lynch Exemption, which allows brokers to follow looser suitability requirements than planners, who must adhere to the fiduciary obligations under the Investment Advisers Act of 1940. For bank brokerage, this means that if consultants are truly to be financial planners, they need to become registered investment advisers (RIAs), a designation afforded by a Series 65 license, although rules vary from region to region and regulator to regulator.

"The Merrill rule means that advisers will often wear both a brokerage and a planning hat," says Heywood Sloane,...

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