is investment managed by money manager considered brokerage window?

[Tina W]

I have a 401k with pooled assets with 6 investment options which are included on their enrollment forms (such as international, mid cap, small cap, fixed & money market) An account with Morgan Stanley is set-up for each investment and the broker or money manager buys and sells stocks and bonds in each account according to the type of investment. The Money Market is strictly in a MS money market. The brokers is unable to provide comparative chart. Would this type of investment be considered a brokerage window?

There is another plan with the same broker that has this same type of arrangement but some of the funds have stocks and mutual funds. Does the fact that they have some mutual funds change anything?

[Bird]

When you say "pooled assets with 6 investment options" that appears contradictory. You mean that the broker creates 6 pools of money and invests them 6 different ways, and participants direct their investments into those pools? If so, it doesn't sound like a brokerage window.

If the broker is setting up separate accounts for each participant and then investing according to the 6 different goals, then that might be a brokerage window.

I think we need to know more about how the accounts are run.

[Tina W]

When you say "pooled assets with 6 investment options" that appears contradictory. You mean that the broker creates 6 pools of money and invests them 6 different ways, and participants direct their investments into those pools? If so, it doesn't sound like a brokerage window.

If the broker is setting up separate accounts for each participant and then investing according to the 6 different goals, then that might be a brokerage window.

I think we need to know more about how the accounts are run.

What I am referring to is that each participant does not have their name on an account. There are 6 accounts under the plan. One for each plan investment. The gain is allocated to the participant at the end of the quarter. (example, mid-cap has 10,000 in earnings which is allocated prorata by participants account balance in that fund)

[rcline46]

What you have are six un-registered mutual funds amoung which the participant has choices. The broker must reveal his fees, as well as reporting all fees (buy/sell) or commissions each quarter. He is not permitted to 'net' to a gain or loss.

This set up is not a self directed brokerage account as the participants do not order the buy/sells. The broker has full discretionary (ie FIDUCIARY) control. And since the participants can choose from only 6 choices, all would be considered a DIA. For fee disclosure you have managed to have the worst of all worlds.

[Tina W]

What you have are six un-registered mutual funds amoung which the participant has choices. The broker must reveal his fees, as well as reporting all fees (buy/sell) or commissions each quarter. He is not permitted to 'net' to a gain or loss.

This set up is not a self directed brokerage account as the participants do not order the buy/sells. The broker has full discretionary (ie FIDUCIARY) control. And since the participants can choose from only 6 choices, all would be considered a DIA. For fee disclosure you have managed to have the worst of all worlds.

Agreed, I submitted a question to TAG and they agree that they have DIAs and full disclosure is needed. Luckily, the client is going to move to a different investment and allocated contracts.

Thanks for the reply