Best-Interest Contract Exemption (BICE)

In the world of investment advisors, there exists certain kinds of pay that earn the name "conflicted compensation." We know...it sounds like a paycheck that needs a psychiatrist. Rather, these represent kinds of compensation that might cause some conflict of interest for the investment advisor.

For instance, if an advisor overseeing your retirement account got paid each time they made a transaction, that could lead to a conflict. The advisor would have an incentive to make transactions and might be tempted to churn things a bit just to run up these kinds of payments.

So, in general, "conflicted compensation" is banned by industry standards. However, an exception can be made if the advisor gets a best-interest contract exemption. The goal of the rule is to allow other types of financial professionals, like broker dealers, to participate in retirement investing.

If certain requirements are met, and if the investor signs a document allowing it, a BICE can open up certain kinds of commissions and fees that would otherwise be considered inappropriate.