MUTUAL FUND AND VARIABLE INSURANCE CONTRACT REVENUE SHARING AND THE STRATEGIC PARTNERS PROGRAM
Although The Legend Group offers thousands of mutual funds from more than 250 mutual fund companies, and hundreds of variable life and annuity contracts from more than 100 insurance companies, we concentrate our marketing and training efforts on those investments offered by a much smaller number of select and well-known companies (Strategic Partners). Strategic Partners are selected, in part, based on the competitiveness of their products, their technology, their customer service and their training capabilities. Strategic Partners have more opportunities than other companies to market and educate our representatives on investments and the products they offer. For a current list of our Strategic Partners, please see Strategic Partners.
Our Strategic Partners pay extra compensation to The Legend Group and/or its affiliates in addition to the usual product compensation described in the prospectus. The additional amounts Strategic Partners pay us vary from one Strategic Partner to another and from year to year. Some Strategic Partners pay up to 45 basis points (0.45%), of your total purchase amount of a mutual fund or variable insurance product. So, for example, if you invest $10,000 in a mutual fund, The Legend Group could be paid up to $45. Additionally, some Strategic Partners make a quarterly payment or additional quarterly payment based on the assets you hold in the fund or variable insurance product over a period of time of up to 15 basis points (0.15%) per year. For example, on a holding of $10,000, The Legend Group could receive up to $15. Alternatively, we may receive compensation from the mutual fund or insurance company as: (1) a flat fee regardless of the amount of new sales or assets held in client accounts; or (2) the greater of such flat fee or amount based on assets and/or new sales as referenced above and any ticket charge payments referenced below. These payments are designed to compensate The Legend Group for ongoing marketing and administration and education of its employees and representatives. You do not make these payments. They are paid by the mutual fund and insurance companies and/or their affiliates out of the assets or earnings of the funds or insurance companies or their affiliates.
It is important to note that you do not pay more to purchase Strategic Partner mutual funds or insurance products through The Legend Group than you would pay to purchase those products through another broker-dealer, and your representative does not receive additional compensation for selling a Strategic Partner product.
- "Basis point" is a common term used to describe compensation and other costs relating to securities. A basis point is one one-hundredth of a percentage point.
- The Legend Group also may receive revenue sharing payments from companies that are not Strategic Partners.
POTENTIAL CONFLICTS OF INTEREST IN RECEIVING REVENUE SHARING FROM STRATEGIC PARTNERS
A potential conflict of interest exists in that The Legend Group is paid more revenue-sharing fees if you purchase one type of product instead of another and/or you purchase a product from one particular sponsor instead of another. Your representative also indirectly benefits from Strategic Partner payments when the money is used to support costs relating to product review, marketing or training, or for waiver of ticket charges, as described below. Legend Group financial professionals do not receive any compensation associated with the payments noted above.
MUTUAL FUND TICKET CHARGES
When you purchase a mutual fund of a Strategic Partner in a Pershing brokerage account, The Legend Group may absorb the nominal “ticket charge” for each transaction of approximately $30 which would normally be paid by you or your registered representative. Generally, the mutual fund families that participate in the Strategic Partner Program subsidize some of these ticket charges through the compensation mentioned above or by paying us a per trade fee of up to $10. The type of transaction in a Strategic Partner mutual fund purchase that may qualify for a ticket charge waiver varies depending on the particular Strategic Partner. In general, the ticket charge will be waived for the purchase of certain mutual funds in an amount of $2,500 or more. Every mutual fund offered by The Legend Group may be purchased without a ticket charge by processing the transaction with a check and application sent directly to the mutual fund company. We believe that these ticket charge waivers do not compromise the advice your representative provides to you.
Pershing is the clearing firm for The Legend Group’ brokerage business. Due to this business relationship, Pershing shares with us a portion of the commissions and fees you pay to Pershing. Also, Pershing may provide consulting and other assistance to The Legend Group. We may also participate in other revenue Pershing is paid on the assets held in your account. The following is a brief description of some of the revenue items received from Pershing.
Pershing receives revenue from money market funds, and may share that revenue with The Legend Group for money market funds made available to you for cash sweeps in your brokerage account. The Legend Group may share some of the revenue received from Pershing with your registered representative.
Additionally, Pershing may also pay us a share of the service fees it receives from mutual fund companies that participate in Pershing’s FUNDVEST® no-transaction-fee program. Under the FUNDVEST® program many no-load mutual funds may be purchased subject to program requirements and other restrictions.
TRAINING AND EDUCATION COMPENSATION
The Legend Group and its representatives also receive additional compensation from mutual fund and insurance companies, including Strategic Partners that is not related to individual transactions or assets held in accounts. This money is paid, in accordance with regulatory rules, to offset up to 100% of the costs of training and education of our representatives and employees. In some instances, mutual fund and insurance companies may pay a flat fee in order to participate in a The Legend Group training and educational meeting. These meetings or events provide our representatives with comprehensive information on products, sales materials, customer support services, industry trends, practice management education, and sales ideas.
It is important to note that due to the number of mutual fund and variable insurance products The Legend Group offers, not all product sponsors have the opportunity to participate in these training and educational events. In general, our Strategic Partners have greater access to participation in these events and therefore greater access to, and opportunity to build relationships with, our representatives.
Some of the training and educational meetings for which we or our representatives receive reimbursement of costs may include client attendance. If you attend a training or educational meeting with your registered representative and a product sponsor is present, you should assume that the product sponsor has paid for all or a portion of the costs of the meeting or event.
OTHER CASH AND NON-CASH COMPENSATION
In addition to reimbursement of training and educational meeting costs, The Legend Group and its representatives may receive promotional items, meals or entertainment or other non-cash compensation from representatives of mutual fund companies, insurance companies, and direct participation sponsors, as permitted by regulatory rules. Additionally, sales of any mutual funds and variable insurance products and other products, whether they are those of Strategic Partners or not, may qualify our representatives for additional business support and for attendance at seminars, conferences and entertainment events. Further, some of our home-office management and certain other employees may receive a portion of their employment compensation based on sales of products of Strategic Partners.
RETIREMENT STRATEGIC PARTNERS PROGRAM
The Firm may also receive certain revenue sharing payments from third-party firms, including plan recordkeeping platforms as well as investment managers of mutual funds and the issuers of annuities (each a “Retirement Partner”). Retirement Partners participate in activities that are designed to help facilitate the distribution of their products and services, such as marketing activities and educational programs, including attendance at conferences and presentations to the Firm’s financial advisors. These revenue sharing payments are in the form of a fixed dollar amount that does not depend on the amount of the Plan’s investment in any product or utilization of any Retirement Partner’s services. Retirement Partners may also pay the Firm’s expenses, or provide non-cash items and services, to facilitate training and educational meetings for the Firm’s financial advisors, which similarly do not depend on the amount of the Plan’s investment in any product or utilization of any Retirement Partners’ services. Our representatives do not receive any portion of these payments. For a list of our current Retirement Partners, please see Retirement Partners.
It is important to note that you do not pay more to purchase Retirement Partner products or services through the Firm, than you would pay to purchase those products or services through another broker-dealer, and your representative does not receive additional compensation for selling or recommending a Retirement Partner product or service.
In addition to commission-based compensation for sales of 529 plans, 529 plan assets are included in the amount of total mutual fund or variable annuity assets for which revenue sharing is paid as described above. The Legend Group does not separately account for these payments and does not have any 529 Plan Strategic Partners.
The Legend Group, through its representatives, offers its clients alternative products including: non-listed real estate investment trusts; limited partnerships; business development companies; and oil and gas programs. In addition to commissions The Legend Group receives from the sale of these products, we receive due diligence and/or marketing allowance payments from certain sponsors. While the additional compensation we receive as well as the arrangements we have varies with each sponsor, some product sponsors may pay a due diligence or marketing allowance fee of (i) up to 20 basis points (0.20%) annually on assets held at the sponsor, (ii) up to 150 basis points (1.50%) on the gross amount of each sale, depending on the product, or (iii) a flat fee from certain sponsors regardless of the amount of new sales or assets held in client accounts. These payments are designed to compensate us for ongoing marketing and administration as well as education of our employees and representatives regarding these types of products. You do not make these payments. They are paid by the product sponsor out of the assets or earnings of the product sponsor.
It is important to note that you do not pay more to purchase products through us than you would pay to purchase those products through another broker-dealer, and your representative does not receive additional compensation for selling products from sponsors that pay us such additional compensation.
A potential conflict of interest exists in that The Legend Group is paid more revenue-sharing fees if you purchase one type of product instead of another and/or you purchase a product from one particular sponsor instead of another. Your representative also indirectly benefits from these sponsor payments when the money is used to support costs relating to product review, marketing or training. If you have any questions about any portion of this document, please feel free to discuss them with your registered representative or call 877.819.7455.