Breakpoints Training

NASD, in conjunction with an industry working group, developed the outline provided below in response to Recommendation J of the Report of the Joint NASD/Industry Task Force on Breakpoints, which recommended that member firms provide enhanced training regarding mutual fund breakpoint discounts.


This outline is intended as a model of the critical topics that firms should address in training regarding breakpoint discounts. FINRA recognizes that every firm has a unique business model, and, as a result, firm element training methods and content may vary. However, every firm that sells mutual funds or anticipates selling mutual funds should cover the topics discussed in parts I and II of the outline regardless of the firm's particular business model. For the convenience of members, FINRA has also provided suggestions regarding topics firms should address in the firm-specific portion of their training. Firms should feel free to tailor these sections to reflect their particular business models and record keeping practices.


The primary purpose of this outline is to ensure that registered representatives understand the specific issues that govern breakpoint eligibility, which, in turn, will assist them in determining the appropriate sales charge for Class A share mutual fund transactions. However, understanding the availability of breakpoint discounts is also an important factor in determining which share class is the best investment choice for a customer. Accordingly, registered representatives must understand breakpoint discounts not only to ensure that customers are properly charged, but also to ensure that, in recommending fund purchases, that they perform an appropriate suitability analysis. Thus, this outline also touches on the relationship between breakpoint availability and share class choice.


Although FINRA believes that this outline will assist in educating registered representatives regarding breakpoint discounts and the need to deliver all available discounts, the use of this outline to develop training programs does not diminish members' obligation to provide proper training and supervision to registered representatives that sell mutual funds. Likewise, use of this outline does not constitute a "safe harbor" with respect to a member firm's obligation to comply with all applicable rules and regulations.


Breakpoints Training Outline

Last Updated: 12/17/2003