Pretty soon, you won't be able to prospec

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Sep 10, 2007 9:45 pm

Pretty soon, you won't be able to prospect at all. Trainees will have to get all their business from walk-ins, referalls and osmosis.


Unbelievable:


http://biz.yahoo.com/ap/070910/seniorsfraud.html?.v=7


AP
'Free Lunch' Seminars Can Entrap Seniors
Monday September 10, 8:08 pm ET
By Marcy Gordon, AP Business Writer
'Free Lunch' Seminars Ply Seniors With Food, Golf, but Sales-Pitch Perils Lurk, Regulators Say

WASHINGTON (AP) -- "Free Food. Free Golf. Free Drinks." "Dinner is On Us!" "Act now!" Investment seminar pitches like these abound in areas with large populations of retirees, and regulators are warning seniors to be wary.
A probe of the meetings has uncovered high-pressure sales pitches for unsuitable products, misleading claims and even outright fraud, federal, state and securities-industry regulators said Monday.

The Securities and Exchange Commission held a "seniors summit" on investment fraud and abusive sales practices with the North American Securities Administrators Association, which represents state securities regulators; AARP, the advocacy group for seniors; and the Financial Industry Regulatory Authority, the securities industry's self-policing organization.

While their promoters paint the "free lunch" seminars as educational sessions, sometimes promising that nothing will be sold, "they are designed to sell -- either at the seminar itself or later," said Lori Richards, director of the SEC's Office of Compliance Inspections and Examinations. "They're not educational events."

The investigation conducted by the SEC, state regulators and FINRA found the use of scare tactics to get seniors to question their current investments, claims of fantastic returns with no risk, and "ringers" in the audience who would stand up and offer testimonials of how much they had earned.

The investigation, which ran from April 2006 to June 2007, was conducted in seven states with large numbers of retirees: Alabama, Arizona, California, Florida, North Carolina, South Carolina and Texas.

Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking Committee, said he planned to put forward a legislative proposal to address "the financial exploitation of America's seniors."

"I am alarmed by the unscrupulous, fraudulent and abusive practices highlighted" by the regulators' report, Dodd said in a statement issued after Monday's meeting. "Regrettably, these practices appear to be part of a growing trend of predatory behavior targeted towards America's seniors."

By law, the sales pitches made at the seminars and the materials provided to participants must be approved by a brokerage or investment firm's supervisors and submitted to review by FINRA.

But nearly 60 percent of the 110 investment firms and branch offices examined showed evidence of weak supervision of the employees running the seminars, according to the investigation's report. That is significant, Richards said, and indicates that many firms putting on the seminars need to "immediately step up" their supervision of salespeople. The firms were not named.

Jeannie Bunton, a spokeswoman for the Securities Industry and Financial Markets Association, Wall Street's biggest lobbying organization, said the group had not yet read the report and had no immediate comment on that finding. Association President and CEO Marc Lackritz did say in a statement that "flimflam artists and fly-by-nighters with their gimmicks and come-ons undermine the public's trust and have no place in the financial services industry."

Indeed, 14 of the 110 examinations showed apparent instances of fraud, such as liquidating accounts without a customer's knowledge or consent, or selling bogus investments -- and have been referred to appropriate authorities for possible enforcement action. Fraud against seniors also can occur, for example, in the sale of oil and gas partnerships or phony promissory notes.

People 60 and older make up 15 percent of the country's population but account for an estimated 30 percent of fraud victims. An estimated $16 trillion -- three-quarters of the nation's consumer financial assets -- is held by households headed by people 50 or older, and regulators expect an increase in scams targeting retired baby boomers.

In the past two years, the SEC has brought more than 40 enforcement cases involving alleged fraud against seniors, many in coordination with state authorities. In addition, FINRA, known until recently as the National Association of Securities Dealers, has filed cases against a number of brokerage firms and individual employees.

"Our research shows that almost one in five seniors who lost money on an investment attribute that loss to being misled or defrauded," said Mary Schapiro, FINRA's chairman and chief executive. "This concern is real, and confronting it will require a focused regulatory effort."

Among other things, FINRA is examining whether brokers are using so-called "professional" designations to mislead and defraud senior investors.

Sep 10, 2007 9:54 pm

But there really is no free lunch, and as a senior I can tell you the game for seniors is to try to get the free lunch, and the advisor must sell to win.


Imagine dentists doing educational seminars and then trying to persuade the mark to rip out the other dentists faulty crowns.


Why not call a fig a fig, and elevate the profession to being more referral based? The way to do that is for more senior advisors to take on junior associates, and teach the business by servicing the heck out of existing clients while encouraging junior to follow the referral trail off those satisfied customers.

Sep 11, 2007 9:05 am
fluor:

Why not call a fig a fig, and elevate the profession to being more referral based? The way to do that is for more senior advisors to take on junior associates, and teach the business by servicing the heck out of existing clients while encouraging junior to follow the referral trail off those satisfied customers.



I completely agree. Unfortunately, as my experience has painfully demonstrated the business, at least my firm/office is inundated with selfish, greedy senior advisors. The only thing they're interested in as it relates to a rookie is hoping they flame out after having brought in x number of assets so they can pillage.


Most senior advisors are too insecure/short sighted to recognize any value as it relates to having a junior partner. Meanwhile that concept is flourishing in law firms and accounting firms.

Sep 11, 2007 12:10 pm
Chris Hansen:

[quote=fluor]

Why not call a fig a fig, and elevate the profession to being more referral based? The way to do that is for more senior advisors to take on junior associates, and teach the business by servicing the heck out of existing clients while encouraging junior to follow the referral trail off those satisfied customers.



I completely agree. Unfortunately, as my experience has painfully demonstrated the business, at least my firm/office is inundated with selfish, greedy senior advisors. The only thing they're interested in as it relates to a rookie is hoping they flame out after having brought in x number of assets so they can pillage.


Most senior advisors are too insecure/short sighted to recognize any value as it relates to having a junior partner. Meanwhile that concept is flourishing in law firms and accounting firms.



I agree with both statements! But the reason senior advisors are that way is the wire house mentality they grew up in! (Screw everyone and everything to make quota to keep your job))If you can change the way wire houses and insurance companys treat and train employees you can make our profession  more professional.

Sep 11, 2007 12:40 pm

Good points. Like Reagan said, " vote with your feet ", meaning in this case, it seems the market is forcing all to be more ethical.


The wire houses are focusing on the wealthy with sophisticated new products, with more risk and reward, and the common man is served by efficient producers like the local LPL office or Ed Jones or Ameriprise.

Sep 11, 2007 1:37 pm
fluor:

Why not call a fig a fig, and elevate the profession to being more referral based?



Name a business, even professional services like dentists, MDs, lawyers, that doesn't advertise. Name one that's purely "referral based".

Sep 11, 2007 1:38 pm
doc c:

 and the common man is served by efficient producers like the local LPL office or Ed Jones or Ameriprise.




ROFLMAO

Sep 11, 2007 1:41 pm

How is LPL, EdJ, or Ameriprise more efficient than a wirehouse?  Wirehouse advisors have the ability to serve middle america, it's just not as profitable for us than going after bigger fish.  Ameriprise can only go after people with little money because they use so much insurance in their "financial plans" and EdJ collects a lot of up front money by using A shares, thus making smaller accounts profitable.  With LPL, I guess it would be up to each advisor/office as to how their business is run.  Everyone has a different business model.  I look at it this way, if wirehouses aren't efficient, then why are most of the assets held with them?



doc c:

Good points. Like Reagan said, " vote with your feet ", meaning in this case, it seems the market is forcing all to be more ethical.


The wire houses are focusing on the wealthy with sophisticated new products, with more risk and reward, and the common man is served by efficient producers like the local LPL office or Ed Jones or Ameriprise.

Sep 11, 2007 1:52 pm

Well shadow, now we have an interesting discussion, of course I am looking for the answers.


The fact that wirehouses hold most of the assets is, of course, historical, and there is a big dynamic now with assets moving to other channels.


If we're talking about the average mass affluent investor, say 300k in accounts, and the average book, say 40 million, then when you look at LPL's payout compared to what the average advisor gets at a wire house (Amerprise franchisees get a high payout, too, and Jones reps get to do their own thing with some nice corporate benefits, in the humble viewpoint of some), I'd say efficiency means more money to the advisor, and maybe less cost to the client, while allowing the firm to be profitable.


I'm not challenging the wire house model. I have a lot of respect for my colleagues everywhere.


Hey Mike, I take it you are not affiliated with one of the mentioned firms, and I have no problem with advertising - that's the kind of brand positioning that makes sense. The referrals just come easier when you are already positioned in the prospect's mind, that's a case for affiliating with a branded wire house, or even to wear your golf clothes to work at your own LPL or Ameriprise office.

Sep 11, 2007 2:05 pm

Different strokes for different folks I guess.  My clients like where I am, and there are a lot of benefits to them with me being here.  I like the ease of doing business, if I need something done, it gets done quickly.  I came from the small business world, so I guess I just don't have the urge to open my own office and deal with those hassles again.  Heck, the main reason I even sold my old business in the first place was that I got tired of dealing with employees and all the things a small business entails. 


Wirehouses aren't that expensive to the client, the cost throughout just about any channel is going to be comparable simply due to competition.  No, I don't get the same payout as an Indy, but I don't deal with all the stuff they deal with either so the tradeoff works for me.  But between the bonuses and other incentives, the difference isn't as big as some people make it out to be.  As for Jones, I'm not sure why you'd think they make more than a wirehouse advisor.  Their payouts are similar to ours.  And we get trips too...


For my situation, a wirehouse works.  I have mass affluent clients that I service just fine from here.  But being here also gave me the resources to get HNW and UHNW clients that I would have never had the shot at if I were in another channel. 



doc c:

Well shadow, now we have an interesting discussion, of course I am looking for the answers.


The fact that wirehouses hold most of the assets is, of course, historical, and there is a big dynamic now with assets moving to other channels.


If we're talking about the average mass affluent investor, say 300k in accounts, and the average book, say 40 million, then when you look at LPL's payout compared to what the average advisor gets at a wire house (Amerprise franchisees get a high payout, too, and Jones reps get to do their own thing with some nice corporate benefits, in the humble viewpoint of some), I'd say efficiency means more money to the advisor, and maybe less cost to the client, while allowing the firm to be profitable.


I'm not challenging the wire house model. I have a lot of respect for my colleagues everywhere.


Hey Mike, I take it you are not affiliated with one of the mentioned firms, and I have no problem with advertising - that's the kind of brand positioning that makes sense. The referrals just come easier when you are already positioned in the prospect's mind, that's a case for affiliating with a branded wire house, or even to wear your golf clothes to work at your own LPL or Ameriprise office.

Sep 11, 2007 2:23 pm

Yep, I tend to agree with you about the perception of having a shot at the HNW with a wirehouse. And I don't think Jones gets paid any more, and if you anyone give you **** about getting rid of the small business and says this or that is better, they are just trying to get in a p****** contest.


Also, it is known that HNW individuals start taking on multiple advisors at about 1m plus in assets, and I can tell you, it is easy to move that amount of money no matter what your platform. Of course, have super rich clients (more than six million in my case) - I think this is associated more with the wire house, I'd probably use one myself if I had that much money.


That must feel pretty good, moving from being a small business owner to working at a wire house. I'm not very good at group politics, it would be a disaster. Another reason the indy channel exists, political, not economic.

Sep 11, 2007 8:58 pm
doc c:

If we're talking about the average mass affluent investor, say 300k in accounts, and the average book, say 40 million, then when you look at LPL's payout compared to what the average advisor gets at a wire house (Amerprise franchisees get a high payout, too, and Jones reps get to do their own thing with some nice corporate benefits, in the humble viewpoint of some), I'd say efficiency means more money to the advisor, and maybe less cost to the client, while allowing the firm to be profitable.


At thate level of prodcution, after all expenses, and unless the rep really cuts his standards (support, technology, office) I don't think you're much better off, if at all.


I'm not challenging the wire house model. I have a lot of respect for my colleagues everywhere.


doc c:

Hey Mike, I take it you are not affiliated with one of the mentioned firms, and I have no problem with advertising - that's the kind of brand positioning that makes sense. The referrals just come easier when you are already positioned in the prospect's mind, that's a case for affiliating with a branded wire house, or even to wear your golf clothes to work at your own LPL or Ameriprise office.




If you think the guy in an Ameriprise office in a golf shirt is "positioned" like someone at a wirehouse, well, we have very different views of the world, or different markets, or both.

Sep 11, 2007 9:03 pm
doc c:

 I'm not very good at group politics, it would be a disaster. Another reason the indy channel exists, political, not economic.




You may be right about there being other reasons than financial, but as to "group politics", I just haven't seen that dynamic at a wirehouse. Frankly, I've yet to see anyone give a flying flip about anything other than doing good, clean business. Do the business, and the other stuff takes care of itself.

Sep 11, 2007 9:18 pm
mikebutler222:
doc c:

If we're talking about the average mass affluent investor, say 300k in

accounts, and the average book, say 40 million, then when you look at

LPL's payout compared to what the average advisor gets at a wire house

(Amerprise franchisees get a high payout, too, and Jones reps get to do

their own thing with some nice corporate benefits, in the humble

viewpoint of some), I'd say efficiency means more money to the advisor,

and maybe less cost to the client, while allowing the firm to be profitable.



At thate level of prodcution, after all expenses, and unless the rep

really cuts his standards (support, technology, office) I don't think you're

much better off, if at all.



I'm not challenging the wire house model. I have a lot of respect for my

colleagues everywhere.



[quote=doc c]Hey Mike, I take it you are not affiliated with one of the

mentioned firms, and I have no problem with advertising - that's the kind

of brand positioning that makes sense. The referrals just come easier

when you are already positioned in the prospect's mind, that's a case for

affiliating with a branded wire house, or even to wear your golf clothes to

work at your own LPL or Ameriprise office.



[/quote]





If you think the guy in an Ameriprise office in a golf shirt is

"positioned" like someone at a wirehouse, well, we have very different

views of the world, or different markets, or both.





Hey Mike aren't you the guy that switches firms every .8 years? Just

curious.

Sep 11, 2007 9:41 pm

If you think the guy in an Ameriprise office in a golf shirt is "positioned" like someone at a wirehouse, well, we have very different views of the world, or different markets, or both.


LPL, Ameriprise vs. what, Merrill? At the risk of appearing ignorant, tell me what really makes the Merrill guy special. I've been around, and I'd really like to hear the specifics from you, if you don't mind.

Sep 11, 2007 11:20 pm
Reggin:
mikebutler222:
doc c:

If we're talking about the average mass affluent investor, say 300k in
accounts, and the average book, say 40 million, then when you look at
LPL's payout compared to what the average advisor gets at a wire house
(Amerprise franchisees get a high payout, too, and Jones reps get to do
their own thing with some nice corporate benefits, in the humble
viewpoint of some), I'd say efficiency means more money to the advisor,
and maybe less cost to the client, while allowing the firm to be profitable.



At thate level of prodcution, after all expenses, and unless the rep
really cuts his standards (support, technology, office) I don't think you're
much better off, if at all.



I'm not challenging the wire house model. I have a lot of respect for my
colleagues everywhere.



[quote=doc c]Hey Mike, I take it you are not affiliated with one of the
mentioned firms, and I have no problem with advertising - that's the kind
of brand positioning that makes sense. The referrals just come easier
when you are already positioned in the prospect's mind, that's a case for
affiliating with a branded wire house, or even to wear your golf clothes to
work at your own LPL or Ameriprise office.



[/quote]





If you think the guy in an Ameriprise office in a golf shirt is
"positioned" like someone at a wirehouse, well, we have very different
views of the world, or different markets, or both.




Hey Mike aren't you the guy that switches firms every .8 years? Just
curious.


No, I'm the guy that has moved, the last (and I do mean last) being five years ago. I assume you think that's clever or cutting, somehow, to mention that. I've been through the pros/cons and the reasons why. I wouldn’t recommend it except under very limited circumstances. I’ve had the chance to see wirehouse settings, a bank and the Indy world. Now, what that has to do with the relative stature of Ameriprise versus a wirehouse is a question left hanging.<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />


Now that you’ve tried to make an issue of my history in the industry (spotless U-5, club membership, generous recruiting bonus), how about you tell us about yours? Got the courage?


Sep 11, 2007 11:24 pm
doc c:

If you think the guy in an Ameriprise office in a golf shirt is "positioned" like someone at a wirehouse, well, we have very different views of the world, or different markets, or both.


LPL, Ameriprise vs. what, Merrill? At the risk of appearing ignorant, tell me what really makes the Merrill guy special. I've been around, and I'd really like to hear the specifics from you, if you don't mind.



The sharpest contrast is Ameriprise versus any wirehouse, and if you need the differences in the business model, target client and well, stature between the two explained you either


1) Haven't "been around" as you claimed


or


2) Deluding yourself


Ameriprise, just typing that makes me feel like I need a shower...

Sep 11, 2007 11:38 pm

Well, I'm not going to brag, so I guess you'll just have to remain the Mystery Man. But in my life, I have discovered that perceptions can be pretty subjective. You could be ... living in Chicago in some stuffy suburb, going to your ML office, down the freeway, living your happy Chicago suburban life, and not have a clue how good it can be ( I'm sure it can be terrific in the Chicago suburbs).


Hey, point is, you made the claim, so sleep tight in your bed.

Sep 12, 2007 1:18 am
doc c:

Well, I'm not going to brag, so I guess you'll just have to remain the Mystery Man. But in my life, I have discovered that perceptions can be pretty subjective. You could be ... living in Chicago in some stuffy suburb, going to your ML office, down the freeway, living your happy Chicago suburban life, and not have a clue how good it can be ( I'm sure it can be terrific in the Chicago suburbs).


Hey, point is, you made the claim, so sleep tight in your bed.




Is this some attempt to threaten me?

Sep 12, 2007 1:35 am

Uh, no. Sorry if you took it that way. It's late, been a long day. I'm saying, you made a claim, so back it up. Otherwise, you don't know what you don't know. Sleep tight in this case means, good night. Like, good night, fellow human. Not at all meant to be unfriendly.