A little help please

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Feb 9, 2010 3:12 am

I've got a friend running for a major political office.  He has asked me to put together a few important issues that may affect what we, as advisors, do in the future.  Even though we don't think much about it, policy plays a huge role in our profession. Usually advisors don't get a say in policy, and end up having to be reactionary to policy passed down.  So I need your help.  Here are a couple policies/issues that are hot button, or may be soon.  Any others would be greatly appreciated:

 
1.  Elemination of 12b-1 fees
2.  Transaction tax on all trades
3.  Finra TV adds bashing advisors (basically calling all of us criminals)
4.  Politicians demonizing investment firms (we are now the enemy)
 
Other ideas would be helpful
Feb 9, 2010 10:19 am

Advisor's providing advice to participants in Qualified Plans, including the rules around fiduciary liability

National charters and regulation for Insurance Companies, the state rules are getting nuts


Feb 9, 2010 10:26 am

Rank it sounds like you've got a good start.  And I think ice added some really good ones.

However, if I was your friend, I would not even dream of trying to be pro-advisor on this.  We are in the minority.  The politicians have successfully blamed the investment firms and the public has swallowed it hook, line and sinker.

Feb 9, 2010 11:03 am

The bigger problem is that "advisors" are lumped together with the stupid f'ing banks they are affiliated with.  What most people don't realize is that we just provide advice, our parent firms are the one's that destroyed the banking system (OK, not mine, but we are in this together).

 
And then you have RIA firms, indy brokers, etc. being lumped in with the rest of them.  Makes no sense.  We need a marketing campaign to change the perception of "advice".  Fortunately (please correct me if I am wrong), I think the days of the wirehouses pumping their IPO underwriting shares to their retail clients is gone.  That was part of the problem of "yesteryear".  Most of the wirehouse advisors I know just do their own thing now.
 
Good list, though.
Feb 9, 2010 11:12 am
rankstocks:

I've got a friend running for a major political office.  He has asked me to put together a few important issues that may affect what we, as advisors, do in the future.  Even though we don't think much about it, policy plays a huge role in our profession. Usually advisors don't get a say in policy, and end up having to be reactionary to policy passed down.  So I need your help.  Here are a couple policies/issues that are hot button, or may be soon.  Any others would be greatly appreciated:

 
1.  Elemination of 12b-1 fees- Don't see a problem with this.
2.  Transaction tax on all trades
3.  Finra TV adds bashing advisors (basically calling all of us criminals)
4.  Politicians demonizing investment firms (we are now the enemy)- I don't think they are correct, but I don't think they are wrong either...
 
5. Fiduciary
6. Full Disclosure of fees(including upfront, trails,surrender charges etc in bold) not prospectus, but a sheet a client actually has to sign
7. I would say annuities but I think #6 above takes care of those issues
8. 1099 status(for us indys)
 
Other ideas would be helpful
Feb 9, 2010 11:23 am

I saw Obama likes annuities so I think they are safe...

 

Eliminate 12b-1 fees, though, and you eliminate all incentive to service those clients.  I don't care if you rename them servicing fees or whatever, but elimination is just silly and hurts the common man who's account is too small for a wrap arrangement.
Feb 9, 2010 11:33 am

Indy, don't you know Suze Orman thinks that investing should be free?  Except for her books, of course.

Feb 9, 2010 11:33 am

I don't think you can incentivise to service... Even wrap accounts have crappy service...The 12b-1 isn't a service fee, it is a kick back..


Normally if you sell a commission product you get the upfront(i.e. comm) but nothing else(in every other industry that is) it is not like my car salesman gets a piece of the action off my loan...
Feb 9, 2010 11:47 am
chief123:

I don't think you can incentivise to service... Even wrap accounts have crappy service...The 12b-1 isn't a service fee, it is a kick back..


Normally if you sell a commission product you get the upfront(i.e. comm) but nothing else(in every other industry that is) it is not like my car salesman gets a piece of the action off my loan...
 


I'll give you this...if an advisor is not servicing accounts under management, the advisor doesn't deserve to collect a fee.  I'd like to think that eventually, the client gets fed up and takes assets to someone who will service them.
 
Your car salesman has nothing to do after the car is bought...that's when the service department kicks in and (shock) gets paid servicing fees.  Imagine if congress outlawed all service fees and said that they were included in the cost of the car upfront.  Can you imagine how crappy service would get overnight?
Feb 10, 2010 2:58 am
Moraen:

Rank it sounds like you've got a good start.  And I think ice added some really good ones.

However, if I was your friend, I would not even dream of trying to be pro-advisor on this.  We are in the minority.  The politicians have successfully blamed the investment firms and the public has swallowed it hook, line and sinker.



 
My buddy is also a financial planner, different firm,  and we are trying to garner support in the financial advising community.  The area we live in is heavily brokered, and so far our grass-roots response has been great.  I'm looking to help him out with a few talking points that he can bring to the table within the industry, not to the general public.  Basically we have been talking to other advisors, branch managers, financial firms and the like trying to let them know it would make sense to have someone that understands their needs elected.  Thanks for the help so far everybody.
Feb 10, 2010 7:20 am
rankstocks:
Moraen:

Rank it sounds like you've got a good start.  And I think ice added some really good ones.

However, if I was your friend, I would not even dream of trying to be pro-advisor on this.  We are in the minority.  The politicians have successfully blamed the investment firms and the public has swallowed it hook, line and sinker.



 
My buddy is also a financial planner, different firm,  and we are trying to garner support in the financial advising community.  The area we live in is heavily brokered, and so far our grass-roots response has been great.  I'm looking to help him out with a few talking points that he can bring to the table within the industry, not to the general public.  Basically we have been talking to other advisors, branch managers, financial firms and the like trying to let them know it would make sense to have someone that understands their needs elected.  Thanks for the help so far everybody.



Got it.  That makes more sense.

Feb 11, 2010 2:04 am

Here's another I really didn't think about.  With the administration trying to extend the BAB's program, there is an arguement to be made that is shifting power from the states to the federal government.  There are rumors that the federal government will continue to force even more stringent qualifications to the program, forcing local municipalities to conform in order to receive lower borrowing costs.

Feb 11, 2010 9:02 am
iceco1d:
chief123:

I don't think you can incentivise to service... Even wrap accounts have crappy service...The 12b-1 isn't a service fee, it is a kick back..


Normally if you sell a commission product you get the upfront(i.e. comm) but nothing else(in every other industry that is) it is not like my car salesman gets a piece of the action off my loan...

 
Couple of things...
 
1.  YES, car dealerships, and car salesmen, DO get a piece of the action from your loan (a finders fee).
 
2.  Everytime you need service for your car, you PAY for it. 
Only if you are dumb enough to finance through the dealership.. My last car we got a loan from our local bank(their rates were way better)..
 
On the second point I completely agree with you...But what I don't pay for is a monthly fee every month for an oil change(i pay it when I need it).
 
12-b1s aren't service fees, because you can't do anything but rebalance. There is nothing else you are doing..
Feb 11, 2010 9:05 am
Indyone:
chief123:

I don't think you can incentivise to service... Even wrap accounts have crappy service...The 12b-1 isn't a service fee, it is a kick back..


Normally if you sell a commission product you get the upfront(i.e. comm) but nothing else(in every other industry that is) it is not like my car salesman gets a piece of the action off my loan...
 


I'll give you this...if an advisor is not servicing accounts under management, the advisor doesn't deserve to collect a fee.  I'd like to think that eventually, the client gets fed up and takes assets to someone who will service them.
 
Your car salesman has nothing to do after the car is bought...that's when the service department kicks in and (shock) gets paid servicing fees.  Imagine if congress outlawed all service fees and said that they were included in the cost of the car upfront.  Can you imagine how crappy service would get overnight?

Agree but with a car, you can tell when service is done or needs to be.. With investments it's purely theoretical that something needs to be done... And how do you define service in A share accounts(can't switch between fund companies, so simply rebalancing? Because we know the people who oppose getting rid of 12-b1s are buy and hold types, so it's not active management..)
 
If people want to collect service fees they should put people in a fee account where fiduciary is required.
Feb 11, 2010 5:42 pm
chief123:

I don't think you can incentivise to service... Even wrap accounts have crappy service...The 12b-1 isn't a service fee, it is a kick back..


Normally if you sell a commission product you get the upfront(i.e. comm) but nothing else(in every other industry that is) it is not like my car salesman gets a piece of the action off my loan...
 
Actually they do and can be a large part of their earnings.
Feb 14, 2010 2:46 pm
Indyone:
chief123:

I don't think you can incentivise to service... Even wrap accounts have crappy service...The 12b-1 isn't a service fee, it is a kick back..


Normally if you sell a commission product you get the upfront(i.e. comm) but nothing else(in every other industry that is) it is not like my car salesman gets a piece of the action off my loan...
 


I'll give you this...if an advisor is not servicing accounts under management, the advisor doesn't deserve to collect a fee.  I'd like to think that eventually, the client gets fed up and takes assets to someone who will service them.
 
Your car salesman has nothing to do after the car is bought...that's when the service department kicks in and (shock) gets paid servicing fees.  Imagine if congress outlawed all service fees and said that they were included in the cost of the car upfront.  Can you imagine how crappy service would get overnight?



Churning would get much worse if they eliminated the 12b-1.  Say buh-bye to transfers in kind as well.

Feb 14, 2010 6:11 pm

Fiduciary standard for all people positioning themselves to sell advice - insurance brokers, planners, etc. It's a simple issue - good for politics - and it shouldn't be controversial.

Feb 15, 2010 11:58 am
san fran broker:

Fiduciary standard for all people positioning themselves to sell advice - insurance brokers, planners, etc. It's a simple issue - good for politics - and it shouldn't be controversial.


Noooooooo!!!!  Don't take away one of my main selling points! 
Feb 15, 2010 12:55 pm
joelv72:
san fran broker:

Fiduciary standard for all people positioning themselves to sell advice - insurance brokers, planners, etc. It's a simple issue - good for politics - and it shouldn't be controversial.


Noooooooo!!!!  Don't take away one of my main selling points! 



My god... When you think about it... We independents have a business model built around the incompetence and corruption of brokerages. What if any of this financial regulation really did work and these firms were able to use their scale?

If it wasn't corrupted by Finra and Congress...

It would be horrible!

Glad it won't happen.

Feb 15, 2010 2:36 pm
san fran broker:
joelv72:
san fran broker:

Fiduciary standard for all people positioning themselves to sell advice - insurance brokers, planners, etc. It's a simple issue - good for politics - and it shouldn't be controversial.


Noooooooo!!!!  Don't take away one of my main selling points! 



My god... When you think about it... We independents have a business model built around the incompetence and corruption of brokerages. What if any of this financial regulation really did work and these firms were able to use their scale?

If it wasn't corrupted by Finra and Congress...

It would be horrible!

Glad it won't happen.


 - If they ran an honest shop, there would be no need for us.  The scandals and drama keep guys like us in business!!!