https://www.advisorhub.com/vanguard-to-pay-19-5-million-for-failing-to-disclose-advisor-conflicts/
According to Fidelity’s Advisor Compensation plan, Fidelity uses “complexity” as a factor in determining variable advisor compensation. But it does not necessarily mean “complex for the client to understand.” Instead, it could mean complex according to Fidelity’s internal judgment. A client may find a Treasury ladder or an index fund “complex,” depending on their experience. Does Fidelity classify those products as “simple,” meaning advisors don’t get as much credit or bonus for recommending them?
Don’t Fidelity Advisors earn more variable compensation for steering clients into Fidelity’s managed platforms or annuities and keeping them in those managed products or annuities? Doesn’t the structure ultimately bias recommendations toward Fidelity’s higher-margin products?
I guess alleged vagueness might protect the firm because “complexity” is not transparently defined. Fidelity can flex its meaning internally. Is it possible that it's difficult for clients to independently verify whether a product was labeled “complex” or not based on their needs or simply because it’s more profitable to Fidelity? Therefore, is the use of “complexity” subjective and firm-controlled and appears to be more aligned with Fidelity’s profitability and not client comprehension?