M&T Securities, Inc.’s Business Model
M&T Securities, Inc. (“M&T Securities”) is a FINRA-registered broker-dealer subsidiary of M&T Bank, and is headquartered in Buffalo, NY. M&T Securities sells a variety of investment and insurance products to help clients meet their investment needs, including retirement savings and planning, education saving, and other wealth management needs. Generally speaking, M&T Securities sells investment products through Financial Advisers who are located in M&T Bank branches. M&T Securities also employs Financial Advisers who work in a centralized location and offer services to clients through telephonic and other technological means without being physically present with the client. M&T Securities also employs a variety of other personnel that clients may, from time to time, interact with who specialize in particular functions of the broker-dealer, such as trading personnel and fixed income product specialists.
Generally, M&T Securities acts as an introducing broker-dealer and clears trades through Pershing LLC. As an introducing broker-dealer, M&T Securities works with clients to identify investment products that satisfy their needs and, ultimately, places buy or sell orders for those products through its clearing broker-dealer, Pershing LLC. With respect to a portion of M&T Securities’ accounts, M&T Securities works directly with Product Partners, as defined below, to purchase and sell investment products on behalf of its clients.
M&T Securities is committed to assisting you make decisions that will help you meet your investment goals. To serve you, M&T Securities has entered into selling agreements with a broad selection of mutual fund families, insurance companies who issue fixed and variable annuities, unit investment trust companies, and insurance products, and other financial services companies who offer investment products (collectively, “Product Partners”).DIS-116-DIS Through those Product Partners, M&T Securities is able to offer you the following types of products:DIS-116-DIS
- Equities & Options
- Fixed Income Securities
- Managed Accounts
- Market Linked CDs
- Mutual Funds
- Unit Investment Trusts
M&T Securities is compensated for its services by its Product Partners through sales commissions and other forms of payments that are described in more detail in the Product Partner Arrangements section, below. In addition to payments received from Product Partners, M&T Securities also charges certain fees directly to its clients that are detailed more fully in the Schedule of Fees and Commissions.
Product Partner Arrangements
Compensation to M&T Securities.
M&T Securities is compensated when you buy a mutual fund, annuity, market linked CD, unit investment trust or insurance policy. Payments from mutual fund companies to M&T Securities may include sales charges, selling fees, or concessions (depending on the share class in which you invest), and fees for distribution (Rule 12b-1 fees) and shareholder services. Payments from insurance companies whose annuities and insurance products we sell may include commissions, residuals or trails, and in the case of a variable annuity or variable insurance policy, fees for distribution. Payments from market linked CD issuers and unit investment trust companies to M&T Securities may include sales charges or concessions. The distribution fees and shareholder service fees are paid out of the assets, and are part of the expenses, of the mutual funds or the insurance separate account of the variable annuity or variable insurance policy. Fees and expenses associated with mutual funds, variable annuities, variable insurance sub-accounts, unit investment trusts and market linked CDs are disclosed in the prospectus or final term sheet for the specific investment product.
The compensation paid to M&T Securities varies depending on a number of factors, including the annuity, insurance contract, market linked CD, or mutual fund and the insurer, issuer or distributor that you select, the volume of business M&T Securities provides to the insurer, issuer, or distributor.
M&T Securities, Inc. Preferred Providers
M&T Securities has selected “Preferred Providers” from among the many Product Partners with which it has selling agreements. We believe the selection of financial products offered by these Preferred Providers can help meet a wide variety of investment objectives and enable customers to diversify their portfolios, both at the time of initial purchase and as their investment needs change.
We believe that focusing our training and product support efforts on Preferred Providers, allows our Financial Advisors to gain a more comprehensive understanding of the investment objectives and features of their available products, which, in turn, enables them to better serve our clients. M&T Securities Financial Advisors do not receive additional compensation if they recommend products offered by Preferred Providers and you do not pay any additional or special charges if you purchase a product offered by a Preferred Provider. However, the greater access given to Preferred Providers may lead Financial Advisors to focus on Preferred Provider products when making recommendations to clients, instead of on the products of other Product Partners that are not given the same access. In addition to the compensation described above, and as more fully described below, M&T Securities collects supplemental payments and/or sponsorship payments from Preferred Providers.
The following is a list of approved providers:DIS-468-DIS
- American Funds
- Eaton Vance
- Franklin Templeton
- JP Morgan
- Lord Abbett
- Oppenheimer Funds
- Wilmington Funds
- American National
- Great American Life
- Guardian Life
- Jackson National
- Liberty Life
- Lincoln National
- New York Life
- Pacific Life
- Protective Life
- Security Benefit
- Western & Southern/National Integrity
- American General/US Life
- Great West
- Liberty Mutual
- Mass Mutual
- Security Mutual
- State Life/OneAmerica
- Vantis Life
- Western & Southern/National Integrity
United Investment Trusts
Market Linked CDs
- Bank of the West
- JP Morgan
The above list may be modified from time to time. Product Partners may be added or removed without prior notice to existing investors.
M&T Securities collects supplemental payments from Preferred Providers which are used primarily to help pay the costs we incur to educate our Financial Advisors about investment and insurance products, to service our clients who purchase these products, to offer client seminars, to support marketing efforts, and to help pay the firm’s general operating expenses. The supplemental payments M&T Securities receives for these activities are calculated in different ways by different Preferred Providers and may take the form of asset-based fees, sales-based fees, expense reimbursement, or administrative or record keeping fees. For instance, sales-based fees are calculated as a percentage of the mutual fund family or insurance company’s gross sales through M&T Securities and currently pay up to 0.25% (one-quarter of 1%) of mutual fund sales or insurance contract sales (e.g. $25 for each $10,000 in sales) or up to 0.50% (one-half of 1%) of annuity sales (e.g. $50 for each $10,000 in sales). Asset-based fees are calculated as a percentage of assets managed by the Preferred Provider for M&T Securities customers and currently pay up to 0.05% (one-twentieth of 1%) of mutual fund assets under management (e.g. $5,000 for each $1,000,000 under management) or up to 0.03% (one thirty-third of 1%) of annuity assets under management (e.g. $3,000 for each $1,000,000 under management). Mutual fund families may also make payments to M&T Securities for administrative and record keeping services of up to $10.00 per year for each mutual fund held in a customer’s account. To the extent that any of these supplemental payments are paid by a third party, such as the sponsor, distributor or investment advisor of the fund or annuity or insurance company, and not out of fund, annuity sub-account, or insurance assets or sales charges, these amounts are not required to be included in the mutual fund or subaccount expense tables of the prospectus.
M&T Securities collects annual sponsorships from some Preferred Providers which are used to pay for specific expenses we incur as a result of various Financial Advisor meetings and conferences to which Preferred Providers are invited.
Prohibitions on Use of Supplemental Payments and Sponsorship Payments
M&T Securities does not utilize any Preferred Provider supplemental payments or sponsorship payments to compensate Financial Advisors. In order to avoid any indirect influence on client recommendations, the level of engagement or support from a Preferred Provider is not disclosed to any Financial Advisor, but rather is disclosed only to certain members of the back office at the discretion of the M&T Securities Product Management Team.
Revenues for Additional Services to Preferred Providers.
In limited circumstances M&T Bank and its affiliated companies provide additional services to mutual fund companies and insurance companies. More specifically:
- Wilmington Funds Management Corporation ("WFMC") and Wilmington Trust Investment Advisors, Inc. ("WTIA"), both subsidiaries of M&T Bank Corporation, are the investment advisor and the primary sub-advisor, respectively, of the Wilmington Family of Funds ("Wilmington Funds"). WFMC and WTIA each provide investment advisory services to the Wilmington Funds. WFMC, WTIA, and M&T Securities provide services under 12b-1 plans, shareholder services, and administrative services to the Wilmington Funds, and other subsidiaries of M&T Bank Corporation (collectively "M&T") may in the future be retained to provide additional services. WFMC, WTIA, M&T Securities, and M&T are each entitled to receive compensation for services provided to the Wilmington Funds as described in the funds’ prospectuses. Accordingly, if you purchase a Wilmington Fund, WFMC, WTIA, M&T Securities, and M&T will financially benefit from that transaction. M&T Securities Financial Advisors are not obligated to, or provided extra incentive to, recommend Wilmington Funds; they do not receive additional compensation for recommending Wilmington Funds; and you do not pay any additional or special charges if you purchase Wilmington Funds.
- American International Group, Inc. ("AIG") has retained WTIA to manage a portion of its general account assets for policyholders who purchase an M&T Annuity Advantage fixed annuity contract through M&T Securities. WTIA is compensated by AIG based on assets under management invested in that product. Therefore, generally the more premium received from M&T Annuity Advantage annuities sold by M&T Securities, the greater the assets managed by WTIA, the more compensation WTIA receives. M&T Securities Financial Advisors are not obligated or provided extra incentive to recommend the M&T Annuity Advantage product; they do not receive additional compensation for recommending the M&T Annuity Advantage product; and you do not pay any additional or special charges if you purchase the M&T Annuity Advantage product.
You can obtain more information about the compensation expected to be received by M&T Securities based in whole or in part upon your purchase of an annuity, insurance policy or mutual fund, by calling M&T Securities Client Solutions at 1-800-724-7788. Additional payment and/or compensation information is also available in the individual mutual fund or variable annuity/insurance prospectus and Statement of Additional Information, which are available from the mutual fund or insurance company upon request.
Financial Advisor Compensation Arrangements
M&T Securities has implemented a Financial Advisor compensation plan that is designed to mitigate conflicts of interest. An individual Financial Advisor’s compensation is determined by two primary factors: (1) the amount of sales credit received by the Financial Advisor; and (2) the percentage of the sales credit that is paid out to that particular Financial Advisor.
The sales credit received by a Financial Advisor is comprised of two components: (1) sales credit on new sales of products; and (2) on-going sales credit for products that were previously purchased by clients and have not been sold by the client or moved to another brokerage firm.
With respect to new sales of brokerage products, the sales credit received by Financial Advisors is designed to mitigate conflicts of interest within specific product categories by levelizing compensation for all products within that particular product category. In other words, all sales credit for new sales of mutual funds is the same and all sales credit for new sales of investment only variable annuities is the same, but the sales credit paid for mutual funds is different from the sales credit received for investment only variable annuities. With respect to new sales of insurance products, the sales credit received by Financial Advisors is equal to the revenue received by M&T Securities from its Product Partners.
M&T Securities Financial Advisors also receive on-going sales credit for products that were previously purchased by clients and have not been sold by the client or moved to another brokerage firm. The amount of sales credit received by Financial Advisors is equal to the revenue received by M&T Securities from its Product Partners. Generally speaking, the following product categories pay recurring revenue to M&T Securities that a Financial Advisor would receive as sales credit:
- Fixed Indexed Annuities
- Investment Only Variable Annuities
- Managed Accounts
- Mutual Funds
- Variable Annuities
Once a Financial Advisor’s monthly sales credit is calculated, the Financial Advisor will receive a percentage of that sales credit as his or her individual compensation. The percentage payout that the Financial Advisor receives varies based on their total sales for the prior 12-month period.