Since January, Prudential Securities has been requiring a basic risk-tolerance profile — called the Financial Blueprint — be completed when an account is opened. If not, commissions generated in the account are withheld until the blueprint is done.
A client's asset allocation recommended by the blueprint is then shown on account statements along with the actual allocation, as well as account performance (shown only at year-end). The firm says the goal is to make sure clients' expectations are in line with their professed risk tolerances and goals.
“[Management] wants all new accounts profiled so they can say, ‘Based on your profile, you have reason to expect to grow 8% to 12% a year,” says a Prudential broker in Northern California. But the rep worries that customers will still change their expectations and they won't like having their profiles thrown back at them.
Holding back pay as an incentive to profile new accounts is another concern. “That's particularly upsetting,” gripes a Texas-based rep. “There have been some complaints” about delaying payouts, he says.
But another Prudential producer in California counters that doing profiles is not a big deal. “It's an easy process,” he says. “You just talk to them over the phone, ask them some basic questions that set the risk parameters for the account, and log it in on the new account form. It's nice because it reminds clients of what they tell you.”