Wealth & Risk Management Blog

William Byrnes (Texas A&M) tax & compliance articles

Posts Tagged ‘Financial adviser’

SEC comments muddy the waters in fiduciary standard debate

Posted by William Byrnes on July 29, 2013


The debate over the fiduciary standard that will become applicable to many financial professionals may be coming to a head as the looming deadline for comments on SEC proposals has motivated some advisors to express disapproval over a perceived weakening of the potential standard. Because a heightened fiduciary standard could increase advisors’ compliance costs, while simultaneously increasing consumer confidence in the quality of their advice, it is critical that advisors know the rules of the game.

Recent indications that the SEC may deviate from its previously expressed intent to expand the traditional standard applicable to investment advisors, however, represent a curveball for advisors who are not currently subject to a strict fiduciary standard; the outcome once again seems up for grabs.

Today’s bifurcated approach to fiduciary regulation

read the full analysis at LifeHealthPro – http://www.lifehealthpro.com/2013/07/01/sec-comments-muddy-the-waters-in-fiduciary-standar

 

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Advisors are from Mars, Clients are from Venus

Posted by William Byrnes on January 3, 2012


You’ve been on a few “dates,” and you talk on the phone every couple weeks, but how well do your prospects and existing clients know you and understand your core personal investing philosophy? Small talk breaks down barriers and common interests keep the conversation moving, but taking the advisor-client relationship to the next level takes some work—and a lot of research. A recent survey gives us a head start by elucidating the communication divide that holds many advisors back from taking the big plunge with their prospects.

The survey found that HNW clients favor electronic communication media more than their advisors. Twice as many millionaires than advisors would like to use technology-enabled media—smart phone applications and social media. While 85% of millionaires are willing to communicate through social-media, e-mail, and text messages, only 43% of brokers and financial advisors share that willingness. And your millionaire clients are also more likely to use LinkedIn than you are (28% to 16%). And a third of millionaires already use social media in general as part of their professional life.

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all the planning libraries and client presentations if you are not already a subscriber).

For other client development discussions in Advisor’s Journal, see Advisors’ Stairsteps of Influence (CC 11-49), Getting Your Feet Wet in the Social Media Market (CC 11-79) & Are Portfolios-To-Go Threatening Your Business? (CC 11-77).

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How Many Basis Points Is the Competition Charging for Advisory Services?

Posted by William Byrnes on August 5, 2011


A recent study has blasted the popular belief that lowering your rate will increase your volume of clients. Likely surprising to most, the truth is that lowering your rates could backfire and decrease your attractiveness to potential clients.

PriceMetrix, Inc., a software firm, published the study, which focused on the needs of wealth management firms and their advisors. They considered data from 380 million transactions conducted between 2007 and 2010. Included in the data pool were 1 million fee-based accounts and 4 million transactional accounts totaling over $850 billion in investment assets.

The results of the study show that advisors are miscalculating the appropriate value of their services—and losing money in the process— averaging $20,000 in lost fees.

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

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What’s Driving the Increasing Appeal of the RIA Model?

Posted by William Byrnes on August 4, 2011


A large majority (86%) of advisors who are with an independent broker-dealer find the idea of life at an independent registered investment advisor (RIA) appealing, according to a Schwab Advisor Services study released on March 29th. And when the advisor knows someone who has already made the switch, the number who like the idea of making a move to the RIA model jumps to 95%.

One significant consideration for advisors considering a switch to an RIA is regulatory. Those who fully transition to the RIA model will dump FINRA for the SEC. But whether that’s an advantage or downside to the transition is open for debate.

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

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Advisors’ Stairsteps of Influence

Posted by William Byrnes on July 12, 2011


Advisors understand that referrals from existing clients are their best source for new business, but what else is working, and how effective are other methods being used by advisors to generate new business? A recently released survey provides us with a laundry list of approaches used by advisors to solicit new clients and gauges the productiveness of their marketing efforts.  The survey, which polled 262 financial advisors in November and December of 2010, found that client referrals are still the top way advisors generated new business. Behind client referrals, professional referrals were the second biggest producer.  Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

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Appealing to Your Affluent Clients’ Retirement Planning Values

Posted by William Byrnes on April 12, 2011


Now more than ever, clients and potential clients are concerned about how they’re going to continue to enjoy the lifestyle they’ve grown accustomed to pre-retirement.  Most clients are still looking for the same basic retirement advice from their advisors—advice on how to define and meet their retirement goals.

Following the recent financial crisis, your affluent clients are more likely to gravitate to conservative investment strategies that will preserve their hard-earned principle.  But many of them are not clear on the risks of that strategy—they aren’t aware of the opportunities they’re missing.

You can help them reach the retirement they want and find the level of risk appropriate to their long-term goals.  Here’s a breakdown of their values and priorities and how you can appeal to them.  Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of high net worth investors in Advisor’s Journal, see High Net Worth Clients: How to Find Them, How to Service Them (CC 10-07).

For in-depth analysis of investment planning for affluent clients, see Advisor’s Main Library: Investment Planning.

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FINRA Positions Itself to Oversee Advisers

Posted by William Byrnes on December 8, 2010


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Buzz about the Financial Industry Regulatory Authority, Inc. (FINRA) taking responsibility for regulation of investment advisers has been circulating for a couple of years now—but the talk is suddenly sounding less like gossip and a lot more like a plan. Last week, FINRA’s chief executive, Richard Ketchum, sent a letter to the SEC touting the benefits of appointing a self-regulatory organization (SRO) to oversee advisors. Although Ketchum’s letter does not directly ask the SEC to cede some of its regulatory authority over advisers to FINRA, hints abound.

The Dodd-Frank Wall Street Reform and Consumer Protection Act, passed earlier this year, mandates an SEC study of its investment advisor examinations and whether delegation of advisor regulation to an SRO would improve examinations.  Read this complete article at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of FINRA in Advisor’s Journal, see FINRA Proposes Eliminating Industry Insiders from Arbitration Panels (CC 10-80).

We invite your questions and comments by posting them below, or by calling the Panel of Experts.

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Study Finds that Universal Fiduciary Standard Will Hurt Investors

Posted by William Byrnes on December 6, 2010


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The Wall Street Reform Act1—signed into law by President Obama on July 21, 2010— grants the SEC the power to impose a fiduciary duty on broker-dealers. Although the SEC has not yet moved to apply the fiduciary standard—already applicable to registered investment advisors—to broker-dealers, both sides of the argument have made their voices heard, commissioning studies and sending volleys of comments to the SEC.

Holding broker-dealers to a higher standard would seem, at first glance, to be a positive for their customers.  But a November 1, 2010, Securities Industry and Financial Markets Association (SIFMA) commissioned study calls into question whether applying a fiduciary standard of conduct to all brokerage activities would help investors.  Read this complete article at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of the fiduciary standard of conduct in Advisor’s Journal, see What You Don’t Know Yet Might Hurt You: A Broker’s Duties under the Financial Reform Act (CC 10 40).

We invite your questions and comments by posting them below or by calling the Panel of Experts.

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