Trade Associations
New Trade Group For Minority Advisors Gears Up For Launch By 4Q
Sunday, August 07, 2011 18:40

Tags: investment advisors

In a few months, there should be an all-new networking group for advisors of color to share best practices, network, and otherwise help each other's careers in a largely white industry.

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George Clarke of Silver Spring, Maryland, is putting the finishing touches on the charter of a group he calls the National Association of Minority Retail Registered Representatives and Financial Advisors.


The group will reportedly roll out in the next few months. 


Clarke knows firsthand the value of cooperation in the industry. He previously worked at Edward Jones and then spent five years with J.P. Turner, only to leave that firm -- and his book -- in 2007.


Since then, he's slowly been rebuilding his business back to an AUM of around $1 million as an affiliate of W.R. Rice.


The group looks like it will have a somewhat broader umbrella than the existing Association of African American Financial Advisors, which doesn't publicize the number of members it currently has.


In theory, Clarke's group could reach out to Asian and Latin advisors as well.


As yet, it looks like the acronym for the group will be NAMRRRFA. Just a suggestion to save my typing fingers: since most registered reps are happy to call themselves "advisors" these days, how about just NAMFA?

NAIFA Backs FINRA Examination Of SEC-Registered Investment Advisers
Friday, July 29, 2011 09:50

Tags: broker-dealers | Dodd-Frank | financial planning | investment advisors | registered investment advisors | SRO

It should come as no surprise that the Board of Trustees of the National Association of Insurance and Financial Advisors (NAIFA) unanimously recommended that the Financial Industry Regulatory Authority (FINRA) serve as the self-regulatory organization (SRO) to conduct examinations of Securities and Exchange Commission-registered investment advisers.


"NAIFA believes the most efficient, cost-effective answer is to authorize FINRA to conduct all RIA exams," says the trade group's press release. "FINRA is already subject to SEC oversight, and it would be easier for FINRA to expand its current, substantial examination capabilities to cover RIAs than it would be to establish new SROs or significantly increase SEC exam programs."


NAIFA says it represents the interests of approximately 200,000 agents and their associates nationwide, whose practices focus on  life insurance and annuities, health insurance and employee benefits, multiline, and financial advising and investments. The organization in 1999 changed its name from the National Association of Life Underwriters. 

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SIFMA Suggests The Labor Department Rethink Its Fiduciary Rules
Wednesday, July 27, 2011 06:56

Tags: fiduciaries | SIFMA

Having made its case on the topic of whether brokers should be given the same fiduciary responsibility as RIA reps, lobbying group SIFMA is now sparing few niceties blasting the Labor Department's fiduciary rules.

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The group -- which largely represents broker-dealers -- suggests that the latest regs on advisors who work with retirement accounts "must be withdrawn and re-proposed" to make exemptions for commission-based advisors.


Ken Bentsen of SIFMA warned a House panel that failure to make an exemption would put 7 million relatively small IRA accounts that are currently managed on a commission basis at risk.


He says advisors will dump these clients as no longer worth the effort.


One question: if the commission streams on an IRA with $5,000 in it are currently attractive, how much are these accounts trading?

Separate But Equal: SIFMA Weighs In On What It Wants A "Fiduciary Broker" To Look Like
Friday, July 15, 2011 05:53

 If the lobbying group for big brokerage firms had its way, the "universal" fiduciary standard laid out in the Dodd-Frank Act should be applied in different ways for brokers and investment advisors.


The Securities Industry and Financial Markets Association sent Mary Schapiro a 24-page open letter yesterday detailing its thoughts on a broker fiduciary standard.


As SIFMA points out, Dodd-Frank mandates "no less stringent" rules for how brokers should manage their relationships and responsibilities to clients than those that investment advisors currently obey.


However, no less a figure than Barney Frank, co-author of the reforms, has pointed out that "no less stringent" doesn't necessarily mean applying the Investment Advisers Act of 1940 to everyone, SIFMA argues.


If that were the case, Dodd and Frank would have just eliminated the broker exemption in the IA Act. 


So instead, SIFMA wants an all-new fiduciary standard for brokers.


Naturally, that will take time and effort to rough out -- the SEC will have to figure out how to define "investment advice" in a sales-driven context -- and would have to allow for clients to opt out of clearly disclosed conflicts of interest.


That last bit is interesting, since "conflict of interest" usually means that the advisor is working against the client in some way.


Perpetuating situations where such conflicts "may be consented to by the customer" seems to indicate an urge to steer accounts toward less-than-optimal products that enrich the "fiduciary" advisor and only act as a drain on the client's resources or performance.


SIFMA's lawyers also want any fiduciary relationship to apply to brokers on an account-by-account basis, as it currently does with dual-registered advisors. Once the client signs the contract, the fiduciary responsibility would begin.


In general, SIFMA is happy with its member firms' reps being regulated like investment advisors in most other spheres: advertising, supervisory requirements, licensing and registration, books and records, and so on.


But while they're now willing to consider a fiduciary rule, they still want two different playing fields.

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Financial Planning Coalition Zeroes In On Fiduciary Standard While A Key Consumer Group Shifts To Support Non-SEC Regulation For RIAs
Tuesday, July 12, 2011 23:24

Just when the big financial planning groups seem to be getting some traction promoting the fiduciary label, other organizations are busy lobbying for big changes in the way fiduciaries are regulated.

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The Financial Planning Coalition -- made up of NAPFA, the FPA and the CFP Board -- has issued a statement applauding the Senate Banking Committee for considering the issue of whether all self-proclaimed "investment advisors" should be held to a fiduciary standard.


As they say, "most investors assume their financial services providers are required to provide investment advice that is in their best interest. Unfortunately, this is not always the case. Investment advisors are required by law to put their clients' interests first, but other financial services providers do not have to live up to that high standard when providing advice."


In other words, according to the Coalition, non-fiduciary advisors are riding on the goodwill that fiduciary advisors have created around the job title "advisor," without having to do the work to maintain it.


Dodd-Frank gave the SEC the power to apply the duty to everyone claiming the title or distributing what could be considered investment advice.


Fair enough, but the far more heavily funded and wirehouse-dominated Securities Industry & Financial Markets Association (SIFMA) is lobbying hard to stall the process of putting Dodd-Frank into action -- and that includes making fiduciary rules apply universally. 


As CEO Timothy Ryan recently told Bloomberg, "we just want to see it done responsibly, reasonably, and, if they need more time, quite frankly we'd rather they take more time."


One area of regulation Ryan seems happy to see change: the SEC as separate regulator for larger RIAs.


"We have too many regulatory agencies," he says. "We know that."


And influential advocacy group the Consumer Federation of America sees the transfer of RIA oversight to a self-regulatory organization like FINRA as a done deal.


In her testimony to the Senate Banking Committee, the CFA's investment protection chief Barbara Roper continued her support for a universal fiduciary standard, but concedes that she now agrees with SIFMA where it comes to taking RIAs away from the SEC.


It's a simple question of realism for her, not ideology.


"Having spent the better part of two decades arguing for various approaches to increase SEC resources for investor advisor oversight with nothing to show for our efforts, we have been forced to reassess our opposition to the SRO approach," she says.


As far as she's concerned, the right SRO would be better than what retail investors have to deal with now, which is an SEC so overloaded that smaller advisors can go decades between exams. 




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