onelife1

Client directed brokerage is when the client specifically tells the investment manager "Dude, please direct $200k worth of soft dollar commissions from my money to Morgan Stanley for the year (or whoever else)"

The investment manager will do this even if the broker that the client is directing the brokerage too is horrible at execution, etc. This amount is not allowed to be used to gain benefits for all other clients that the manager is handling

That's my take on it. I've never seen it happen in real life (at equity hedge funds at least) but I could see it happening with a manager handling more than one fund with each fund being totally unrelated.

Someone correct me if i'm wrong.