Best Execution
The duty to seek the most favorable terms reasonably available.
What is Best Execution?
Applies to broker-dealers and to advisers that direct client trades. It is not just the lowest commission: the firm weighs price, speed, likelihood of execution, the size of the order, and total cost. Advisers must periodically review whether the brokers they use still provide it.
Best Execution: a worked example
Choosing a broker with a slightly higher commission that consistently gets better prices can satisfy best execution.
More terms in Retirement Plans, Accounts & Trading
IRA Rollovers vs. Transfers
60-day rollovers are limited to one a year; direct transfers are unlimited.
10% Early Withdrawal Penalty & Exceptions
Distributions before 59 1/2 cost 10% extra, unless an exception applies.
Solo 401(k)
A 401(k) for a self-employed owner with no employees other than a spouse.
Defined Benefit Plan
A pension promising a specific benefit; the employer bears the investment risk.
Defined Contribution Plan
An individual account plan whose payout depends on contributions and returns.
403(b) Plan
A salary-deferral plan for public schools and 501(c)(3) nonprofits.
457 Plan
Deferred compensation for state and local government employees.
SIMPLE IRA
A low-cost plan for employers with 100 or fewer employees.
All Retirement Plans, Accounts & Trading terms · Full glossary