A 27-Year-Old Son Reveals His Dad Lost $2,600 Annually Due to Payment for Order Flow at a Broker
An elderly investor lost approximately $2,600 annually due to payment for order flow (PFOF) practices by his broker. The father, aged 61 and nearing retirement, used an app that advertised commission-free trading but did not disclose how it earned revenue through routing orders to market makers in exchange for compensation. His son, who works in finance, reviewed a year of trade confirmations and calculated the total PFOF revenue generated by his father's trades. While everything was technically disclosed as required under SEC regulations like Rule 606 and FINRA’s best execution rules (Rule 5310), no portion of that compensation returned to the investor. The case highlights how small but consistent losses from trading practices can add up over time, especially for retirees relying on modest supplemental income. Brokers with rebate programs could have shared a fraction—six to eighteen cents per contract—with traders like him.
Topics: brokerage fees options trading retirement SEC disclosures