"We have authority to require brokers to disclose compensation they pay to their associated persons employed in the brokerage business," a Finra spokeswoman said.
Blurred Lines
The largest bonuses can run into millions of dollars, with brokers receiving two and three times the commissions and fees they earned in previous years. Amounts tied to insurance vary, depending on a broker's practice. Some brokers, for example, work in teams that include an insurance specialist. Firms structure bonuses as loans forgiven over seven to 10 years.
When setting the level of a signing bonus, firms typically review a broker's sales across all the financial products that the broker sells, said Jeff Bischoff, a brokerage recruiter in Old Greenwich, Connecticut.
It is not realistic to carve out the amount of those bonuses contributed by insurance firms or other kinds of companies, because brokers sell a mixed bag of products, said Barbara Roper, director of investor protection at the Consumer Federation of America, an advocacy group. "You can't have clean, jurisdictional boundaries for people who are conducting their businesses across those boundaries," she said.
One of the committee's examples focused on fixed annuities, a type of insurance contract in which the insurer pays a fixed income stream in exchange for the investor's lump sum payment. They are regulated by states. But Finra has authority over sales of variable annuities, the value of which is tied to performance of an underlying investment portfolio. Brokers need both insurance and Finra licenses to sell variable annuities.