Suboptimal Trade Execution from Inadequate Broker-Dealer Evaluations
Definition
Advisers make poor decisions on broker-dealers by not periodically and systematically evaluating execution performance, leading to higher costs or worse prices for clients. Without documentation of factors like commission rates, research value, and responsiveness, firms select inferior execution venues. This recurring failure erodes client returns through lack of visibility into execution quality.
Key Findings
- Financial Impact: $Unknown - implicit losses from inferior execution vs. best available
- Frequency: Ongoing - with every trade execution lacking proper review
- Root Cause: Insufficient due diligence on custodial brokers and failure to consider totality of services including qualitative factors
Why This Matters
This pain point represents a significant opportunity for B2B solutions targeting Investment Advice.
Affected Stakeholders
Investment Adviser, Trader, Compliance Officer
Deep Analysis (Premium)
Financial Impact
Data available with full access.
Current Workarounds
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Methodology & Sources
Data collected via OSINT from regulatory filings, industry audits, and verified case studies.
Related Business Risks
SEC Examinations Failing Best Execution Documentation Requirements
Mispriced AUM Fees Due to Inconsistent Discounts and Household Aggregation Failures
Outdated Fee Schedules and Contract-Disclosure Misalignments
Overbilling Due to Household Aggregation Failures Leading to SEC Risk Alerts
AML Screening Audit Failures and Enforcement Actions
Facilitated Money Laundering via Weak AML Screening
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