Sontag Advisory, a New York-based investment adviser, has stopped accepting fees from Charles Schwab Corp and Fidelity Investments for recommending the brokerage firms to its clients, Reuters reported.
Sontag, which oversees $3.6 billion of investments for wealthy families and individuals, accepted a percentage of the assets its clients invested in certain mutual funds sold by the discount brokers.
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Last month, Reuters reported that a few registered investment advisers, including Sontag, were collecting part of that sales fee and not sharing it with their clients – a practice that may violate their fiduciary duties to those clients.
Reuters’ reported also hinted that regulators may be investigating the practice.
According to Reuter’s report, spokespeople at Schwab and Fidelity described the payments as ‘service fees’ for administrative and support services that the advisers performed. However, in an updated disclosure filing, Sontag said the fees could pose a potential conflict of interest.
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