Robo advice, often spoken of as a tool only suitable for the mass affluent, is gaining popularity among high-net-worth investors. According to a report by Swiss research company MyPrivateBanking, 70 percent of wealthy investors said automated advice could positively influence their wealth manager’s advice and decision-making process as well as make processes like registrations and account opening faster, more efficient and convenient. Carmela Melone, an analyst with MyPrivateBanking, added that their data shows that adoption of robo advice is happening much faster among young high-net-worth investors than the mass affluent. “The results provide clear, empirical evidence on why automated advice and robo services are a significant part of every wealth manager’s future.” The report also stated that Intelligent Portfolios from Charles Schwab is the brand investors associate most with robo advice.
Little Rock, Ark.-based Stephens Inc. has been censured and fined $900,000 by the Financial Industry Regulatory Authority over “flash” emails sent by its research analysts. FINRA claims the firm, which has a private client group, failed to properly supervise its research department, which was sending flash emails, designed by Stephens so analysts could more quickly distribute available information on covered companies to sales and trading personnel, without adequate policies and procedures. FINRA found instances of research personnel forwarding the flash emails labeled for “internal use only” to customers; someone also cut and pasted content from an unapproved, draft research report into a flash email. “These failures created the risk that the flash emails could potentially include material nonpublic information that might be misused by sales and trading personnel,” FINRA said. Stephens neither admitted nor denied the charges, but consented to entry of the regulator’s findings.
A financial advisor in Spartanburg, S.C., has pleaded guilty to wire fraud in a $3 million Ponzi scheme, WYFF4 is reporting. Claus Foerster, who most recently worked at Raymond James & Associates in Greenville, S.C., allegedly began stealing from his clients in 2000. He was barred from working as a financial advisor by FINRA in 2014 amid allegations that he would lure clients to withdraw their funds from accounts he held for them through his advisory firm and transfer them into his personal account. He would then use that money for his own use, creating bogus account statements and returning some of the funds to clients as “profits.” His fraud scheme lasted for more than a decade, according to investigators. Foerster faces up to 20 years in prison and $250,000 in fines.