Tags: CFP Board | registered investment advisors | regulation | SRO

A former senior counsel to the House of Representatives Financial Services Committee has been named Director of Government Relations at the CFP Board of Standards. CFP Board hired Washington, D.C. attorney Todd L. Cranford for the newly created position, representing a clear effort by CFP Board to influence the political process surrounding regulation of investment advisors.

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With Congress and the Securities and Exchange Commission expected to make decisions over the next year about how to implement the 2010 Dodd-Frank Act overhauling the nation's financial services industry, CFP Board has tapped a veteran Washington insider to lead its lobbying effort.

Before joining Patton Boggs, a Washington, D.C., law firm active in lobbying Congress on regulatory matters, Cranford served as Senior Counsel of the Committee on Financial Services of the U.S. House of Representatives, according to a CFP Board press release, and Cranford advised former Chairman Barney Frank (D-Mass.) and members of the Committee on policy and legal issues related to capital markets and securities. Before that, he was Senior Counsel in the SEC's Division of Enforcement, where he investigated, developed and instituted civil and administrative actions involving violations of federal securities laws.

Tags: custodians | fiduciaries

Charles Schwab's brokerage agreement contains a clause forcing customers to arbitrate disputes, and some RIAs are expressing concern that using Schwab as a custodian and requiring them to accept the arbitration clause imposes disclosure responsibilities. After all, these clauses have for decades been considered a heavy-handed tactic imposed by Wall Street firms to minimize their legal liability at the expense of investors.

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"I would suggest that RIAs consider, as a strong and SUBSTANTIAL factor in the selection of the custodian to recommend to the RIA’s new clients, the existence of this waiver of the right to participate in class actions, given the very real impact it may possess upon the client at some future time," says Ron Rhoades, an advisor and leader in the movement to maintain a fiduciary standard based on the Investment Advisers of 1940. "I would also suggest that all RIAs considering enhancing their disclosures in their Form ADV, Part 2A, to inform clients that such a waiver of legal rights is mandated by certain recommended custodians, and that not all custodians possess such waivers. Also that class actions against BDs for misconduct are somewhat frequent, and often result in recoveries of funds for customers (albeit in relatively small amounts, per customer, in most instances)."
 

Rhodes, an attorney and CFP practitioner, adds that advisors may want to send existing clients an amendment to Form ADV. " I would suggest a timely Form ADV Part 2A amendment, with the Statement of Material Changes sent to the client and accompanied by a letter to the client explaining the situation in more detail," says Rhoades, an assistant professor at Alfred State University in blog post.

Please post a comment letting A4A members know if your custodian imposes an arbitration clause in its brokerage agreement.
 

Tags: Advisor businesses | asset management

Financial advisors increased assets under management to record levels in 2012, according to PriceMetrix, a practice management research firm for retail brokerages in the U.S. and Canada.

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Assets under management for the average advisor grew 9% in 2012 to $80.8 million over $74 million, according to the firm's third annual Report on the State of Retail Wealth Management, reports Financial Advisor.

Tags: competitors | custodians | Schwab | TD Ameritrade

TD Ameritrade Holding Corporation today announced that total client assets topped $500 billion for the first time ever in Februrary. That's up 14% from a year earlier but it's still just a quarter of the $2 trillion in client assets held at Charles Schwab.

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“Over the last five years, in the midst of difficult market and economic conditions, our client assets are up over 60 percent, as we have gathered more than $170 billion in net new client assets,” Fred Tomczyk, president and chief executive officer said in a press release.

Curiously, the average of 386,000 client trades per day in February 2013 was down 6% from February 2012. A recent update from Schwab for the month of January showed an 8% gain in the number of trades.