Displaying items by tag: advisors

(New York)

Not only is the broker protocol collapsing underneath the feet of advisors, but a new court ruling has just set a precedent which will likely make it harder for advisors to switch firms. A recent ruling by the Georgia Court of Appeals says that advisors who have agreed in a contract to give advance notice of departure, but then do not, are not covered by the Broker Protocol. The case stemmed from a smaller firm, Aprio Wealth Management, making a claim against a group of advisors who moved to Morgan Stanley. “We’re really pleased with the court-of-appeals ruling on this case … We think it’s a very meaningful decision for small and midsize firms, especially for registered investment advisers that can feel confident they’ll be protected from poaching like happened to us”.

FINSUM: The bottom line of this story seems to be that one needs to make sure to give appropriate notice. However, that is not always be easy as there might be extenuating circumstances.

(Washington)

The SEC rule has been a getting a lot of pushback both in the press and by industry commentators. Now, in what only seemed a matter of time, a more formal campaign against the new rule is taking shape. The new “Raise Your Voice” campaign is being organized by a group of RIAs and seeks to unite fiduciaries in a push against the grouping of brokers and advisors in the new rule.

FINSUM: While we do see the SEC’s logic in how it drafted the new rule, brokers and advisors are very different animals and we believe more delineation needs to be drawn between the two.

(Washington)

Advisors all across the country see a major flaw in the SEC rule. Fiduciaries feel they are being completely short-changed by the rule because the way the SEC has drafted it makes advisors and brokers look like identical twins, almost eliminating the distinction from a client’s perspective, according to the “Raise Your Voice” campaign, or a group of advisors pushing against the rule. “The proposed rules depict broker and advisers as essentially the same, like identical twins, but without identical investor protections”, says the spearhead of the campaign, continuing that “The legal, contractual, business and cultural differences dividing brokers and advisers are important and must be clearly stated and explained”. The campaign is encouraging advisors to make their opinions heard while the SEC comment period is open (it closes August 7th).

FINSUM: The SEC tried to make a rule that avoided over-delineating things as part of an effort to avoid loopholes, but this non-standard approach has made many quite angry. We suspect the rule will be edited significantly.

(New York)

Advisors (or advisers) look out, your titles are poised to be taken away by the SEC. While much of the focus on the new SEC best interest rule has understandably been centered around its pseudo-fiduciary components, there is actually a major fight brewing over the SEC’s new rules which restrict the use of certain titles. In particular, it wants to bar brokers from using the word “advisor” and potentially “financial planner” as well. The idea is to only associate the word “advisor” with a fiduciary to make it clearer to consumers. Industry interest groups are already railing against the proposal.

FINSUM: We find this a complicated issue. We understand the fiduciary motivation here, but advisors have been using that title for a long time and, for better or worse, are known that way by the public. Further, a fee structure does not, in our view, change whether someone is an advisor (in the general sense of the word).

(Washington)

Advisors all over the country are wondering about a simple question—why the SEC did not use the word “fiduciary” in its new best interest rule. The answer to the question had remained obscure until this week, when SEC chairman Clayton answered it at a conference following a question by FINRA CEO Robert Cook. Clayton said that the new rule is “definitely a fiduciary principle, just like the fiduciary duty in the investment advisor space is a fiduciary principle”, but continuing that calling standards for both brokers and advisors “fiduciary” and “then defining them would not make it clear that the relationship models were different”.

FINSUM: So basically the SEC avoided using the word so as not to muddle the difference between the relationships of brokers to clients vis-a-vis advisors to clients.