Fee based trading account

[quote=aldo63]

what is going on with this? my firm says there is no
problem and fee based stock accounts.  i  also heard my old
company , morgan stanley , is not going to open new ones and will close
the existing choice account in 120 days? i also heard that they are
going to stop the online trading portion of the account. I guess i
really have not followed this “merrill rule” very closely.

any thoughs?

[quote=aldo63]

  i  also heard my old company , morgan stanley , is not going to open new ones and will close the existing choice account in 120 days? i also heard that they are going to stop the online trading portion of the account. I guess i really have not followed this "merrill rule" very closely.

any thoughs?

[/quote]

Your info about MS is incorrect.

[quote=AllREIT]
The firms will do anything to avoid being RIA's since that opens up a big can of worms.
[/quote]

The firms are ALREADY RIAs in other sorts of accounts. The issue is how to incorporate that process into what would otherwise be a traditional brokerage account.

[quote=aldo63]

what is going on with this? my firm says there is no problem and fee based stock accounts.  [/quote]

Actually, depending on the final touches from the SEC there are "problems" with the construction of the older fee in lieu of commission accounts. I have no doubt that behind the scenes your firm is scrambling to anticipate where the SEC is going and what changes they'll have to make to meet the SEC.

The more I hear about this crap, the more I love selling annuities.

[quote=mikebutler222]

[quote=AllREIT]
The firms will do anything to avoid being RIA's since that opens up a big can of worms.
[/quote]

The firms are ALREADY RIAs in other sorts of accounts. The issue is how to incorporate that process into what would otherwise be a traditional brokerage account.

"As a Registered Rep, you are an employee of "the firm" with a duty to act in the best interests of the firm at all times, subject to the limitations of NASD wrt to not harming clients."

This is not an accurate statement.  Not all RR's are employees of their firm.  I'm not an employee of my B/D.  Secondly, we have no duty to act in the best interest of the firm.  Rather, we simply have to make sure that the investments are "suitable".  ex. Two mutual funds are suitable for my client.  One pays my B/D more money.  I have no duty to use the one that pays the firm more money.

Also, if you are acting as an IAR, you must act in a fiduciary manner.  It does not matter that you are an IAR instead of being your own RIA.

[quote=AllREIT] [quote=mikebutler222] <?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

[quote=AllREIT]
The firms will do anything to avoid being RIA's since that opens up a big can of worms.
[/quote]

The firms are ALREADY RIAs in other sorts of accounts. The issue is how to incorporate that process into what would otherwise be a traditional brokerage account.

[/quote]

Mike, the deal is that brokers are acting as IAR's representing RIA's who run the SMA's towards clients. They are not acting as RIA's themselves.  [/quote]

That's true of SMA accounts, it's not true of accounts where MS acts as an RIA, and yes, those accounts exist in several forms. They include those accounts where the rep runs a discretionary advisory account (most every firm has some version) and/or when the firm is hired directly as an RIA.

[quote=AllREIT]
As a Registered Rep, you are an employee of "the firm" with a duty to act in the best interests of the firm at all times, subject to the limitations of NASD wrt to not harming clients. This is where the merrill lynch rule came from. [/quote]

That’s about as self serving and cynical a way to describe the ML rule as has ever been stated.  The “best interests of the firm at all times” line is a fiction you use with your clients as a sales pitch. You should know enough about the industry to know it’s untrue. The ML rule simply allowed fee-based brokerage accounts to avoid coming under the IAA of 1940 and continue to be regulated under the traditional brokerage rues.

[quote=AllREIT]Right now its unclear how the SEC will resolve this. Because if it turns out that going forwards brokers have a positive duty to act in the best interests of clients, you are going to see some big changes in the industry.
[/quote]

We’ve ALWAYS had the positive duty to act in the best interests of the client, due suitability, etc. What’s been missing, and has yet to be resolved, is how the new requirement (or at least what seems to be a requirement) of acting as a fiduciary. Being a fiduciary isn’t the only way to act in a client’s interests, although that’s the way the term is being bandied about.

This is a fine example about how posting frequently and on all subjects, including those where your scope of knowledge is limited, eventually makes one look like a fool, even if one is generally considered an intelligent person.  I'm not an employee of my B/D either, but even when I was, I had enough sense to put client interests ahead of my employer's.  Anyone who's studied for the series 7 should know better than a foolish generalization like that.

Don't take frequent posting as an automatic sign of intelligence on all subjects.

[quote=mikebutler222][quote=AllREIT]

As a Registered Rep, you are an employee of "the firm" with a duty to act in the best interests of the firm at all times, subject to the limitations of NASD wrt to not harming clients. This is where the merrill lynch rule came from. [/quote]

That’s about as self serving and cynical a way to describe the ML rule as has ever been stated.  The “best interests of the firm at all times” line is a fiction you use with your clients as a sales pitch. You should know enough about the industry to know it’s untrue. The ML rule simply allowed fee-based brokerage accounts to avoid coming under the IAA of 1940 and continue to be regulated under the traditional brokerage rues. [/quote]

Oh please. The ML rule enabled B/D's to evade the responsibilities that the IAA would have put on them and thier reps when dealing with fee based accounts.

The goal of the B/Ds was to create a business model that had all the flavor of fee based but just one calorie.

That is what it has always been about. Creating a "safe space" for all sorts of shady activities. It's the exact same reason AMP and the B/Ds are creating a circus over at the CFP standards comittee over this exact issue.

Either you explicitly act in the best interests of clients, or you don't.

[quote=AllREIT]Right now its unclear how the SEC will resolve this. Because if it turns out that going forwards brokers have a positive duty to act in the best interests of clients, you are going to see some big changes in the industry.
[/quote]

We’ve ALWAYS had the positive duty to act in the best interests of the client, due suitability, etc.What’s been missing, and has yet to be resolved, is how the new requirement (or at least what seems to be a requirement) of acting as a fiduciary. Being a fiduciary isn’t the only way to act in a client’s interests, although that’s the way the term is being bandied about.[/quote]

If you want to play word games, there are multiple ways to act in a clients sole best interest. If not, there is only one way.

I have no illusions about this, the B/Ds will fight to create some kind of "bubble" where the ethical standards applicable to a commision account (caveat emptor) apply to a fee based arrangement.

My guess is that the B/Ds will say that their job is to provide a platform with the best execution, thus acting in the best interests of clients. Having standards over the quality of advice etc would open up a huge can of worms and endless litigation.

these accounts were wrong to begin with. they were knee jerk reactions by wirehouse firms to deal with online competition.

the problem is brokers didn't place their most active trading clients in these accounts,  they placed their least active clients.

the longer im in this business the more i think paying for advice with commissions works best.   or use sma's.

QUOTE=AllREIT] [quote=mikebutler222][quote=AllREIT]

As a Registered Rep, you are an employee of "the firm" with a duty to act in the best interests of the firm at all times, subject to the limitations of NASD wrt to not harming clients. This is where the merrill lynch rule came from. [/quote]

That’s about as self serving and cynical a way to describe the ML rule as has ever been stated. The “best interests of the firm at all times” line is a fiction you use with your clients as a sales pitch. You should know enough about the industry to know it’s untrue. The ML rule simply allowed fee-based brokerage accounts to avoid coming under the IAA of 1940 and continue to be regulated under the traditional brokerage rues. [/quote]

Oh please. The ML rule enabled B/D's to evade the responsibilities that the IAA would have put on them and thier reps when dealing with fee based accounts.

The goal of the B/Ds was to create a business model that had all the flavor of fee based but just one calorie.

[/quote]

You’re as wrong here as you’ve been on this subject all along. The goal was to create a brokerage account that avoided the obvious conflict of interest in commission accounts and the then issue du joir of “churning”.

[quote=AllREIT] That is what it has always been about. Creating a "safe space" for all sorts of shady activities. It's the exact same reason AMP and the B/Ds are creating a circus over at the CFP standards comittee over this exact issue. [/quote]

Again you’re confused, there was nothing “shady” about it, in fact it began to end a shady practice. Now, the CFP and AMP fight, if you think that’s about business ethic as opposed to what it REALLY is, which is a turf battle on the “fee only” front, you’re even more in the dark about this industry than I had thought. In fact, the entire battle by the FIA against the ML rule was a turf battle to begin with. “Fee only” types hated that the “I won’t charge you commissions” sales line they had relied upon had been erased.

[quote=AllREIT]

Either you explicitly act in the best interests of clients, or you don't.[/quote]

You don’t have to be a fiduciary to act in a client’s best interests and it’s just juvenile to pretend otherwise.

[quote=AllREIT]Right now its unclear how the SEC will resolve this. Because if it turns out that going forwards brokers have a positive duty to act in the best interests of clients, you are going to see some big changes in the industry.
[/quote]

We’ve ALWAYS had the positive duty to act in the best interests of the client, due suitability, etc.What’s been missing, and has yet to be resolved, is how the new requirement (or at least what seems to be a requirement) of acting as a fiduciary. Being a fiduciary isn’t the only way to act in a client’s interests, although that’s the way the term is being bandied about.[/quote]

If you want to play word games, there are multiple ways to act in a clients sole best interest. If not, there is only one way. [/quote]

There’s no word games required. You simply have to understand the nature of the industry, which you proved from jump street that you don’t get.

At least you dropped all traces of your ridiculous claims that reps have a regulatory responsibility to act “in the best interests of the firm” and your ignorance over the various common situations in which firms ALREADY act under the aegis of the IAA of 1940.

[quote=Vin Diesel]the problem is brokers didn't place their most active trading clients in these accounts,  they placed their least active clients.[/quote]

Now there's a theory I hadn't heard before....

My take, from the point of view of a wirehouse RR, not an Indy, and I get this from my own independent reading, not from any propoganda that the firm has given me:

The court decision ruled that the SEC did not have the authority or power or whatever, to make an exception to the Investment Act for the B/D's. As a result the RR who offers a non discretionary wrap account, acts as, and takes the legal responsibility to act as a fidicuiary. We cannot do that. Fiduciary means that we have a responsibility to "put the clients interests first". This is in contrast to the RR;s responsibility to "recommend investments that are "suitable"".

So a RR can have investments A and B, with BOTH being suitable but A being a bit more expensive and paying more to the RR, thus being a bit more suitable. As a fiduciary, he must recommend B, or he has violated his fiduciary responsibility to the client. A RR can recommend either one since they are both "suitable"

Thats my understanding, I dont claim to be a rocket scientist on this, so be smart and dont attack me.

The SEC HAS NO LEWAY IN THIS, as it is a court ruling, and they must abide. What they have done is ask for relief in the form of 120 days for the affected parties to come up with another way. The wirehouses all have some form of account which would resolve this issue - a fee for advice account, vs a fee in lieu of commish account, and since its a fee for advice, with strict limits as to what can and cannot be done in these accounts, we can act as fiduciaries. However, some wirehouses have more fully developed this platform than others.

We'd all like to think that this is all BS, because we all always act in the best interest of the client. Most of us do. We all know that some dont. My opinion is that a lot of this is nothing more than the fee based planning world, i.e. FPA, etc, wanting to protect their territory

JMHO

When I go back in my memory bank (small deposit base), I seem to recall that these accounts were a way for firms to generate predictable revenues in bear markets.

[quote=mikebutler222]

[quote=Vin Diesel]the problem is brokers didn't place their most active trading clients in these accounts,  they placed their least active clients.[/quote]

Now there's a theory I hadn't heard before....

[quote=AllREIT] [quote=mikebutler222]

[quote=Vin Diesel]the problem is brokers didn't place their most active trading clients in these accounts,  they placed their least active clients.[/quote]

Now there's a theory I hadn't heard before....

[/quote]

That's why NASD said the Fee-in-leiu accounts were unsuitable for most clients.

[/quote]

You got a source for that?

Fiduciary means that we have a responsibility to “put the clients interests first”. This is in contrast to the RR;s responsibility to “recommend investments that are “suitable””.

So a RR can have investments A and B, with BOTH being suitable but A being a bit more expensive and paying more to the RR, thus being a bit more suitable. As a fiduciary, he must recommend B, or he has violated his fiduciary responsibility to the client. A RR can recommend either one since they are both "suitable"

Although it seems like splitting hairs in some respects; this is my take on the issue too. 

[quote=mikebutler222][quote=AllREIT] [quote=mikebutler222]

[quote=Vin Diesel]the problem is brokers didn't place their most active trading clients in these accounts,  they placed their least active clients.[/quote]

Now there's a theory I hadn't heard before....

[/quote]

That's why NASD said the Fee-in-leiu accounts were unsuitable for most clients.

[/quote]

You got a source for that?

[quote=Dust Bunny]

A RR can recommend either one since they are both “suitable”

Although it seems like splitting hairs in some respects; this is my take on the issue too. 

intersting article

http://www.marketwatch.com/news/story/schwab-seen-winner-bat tle-between/story.aspx?guid=%7B5C575B80%2DF63A%2D4992%2D9580 %2DE55C2D4F11B5%7D

[quote=AllREIT] [quote=mikebutler222][quote=AllREIT]

As a Registered Rep, you are an employee of "the firm" with a duty to act in the best interests of the firm at all times, subject to the limitations of NASD wrt to not harming clients. This is where the merrill lynch rule came from. [/quote]

That’s about as self serving and cynical a way to describe the ML rule as has ever been stated.  The “best interests of the firm at all times” line is a fiction you use with your clients as a sales pitch. You should know enough about the industry to know it’s untrue. The ML rule simply allowed fee-based brokerage accounts to avoid coming under the IAA of 1940 and continue to be regulated under the traditional brokerage rues. [/quote]

Oh please. The ML rule enabled B/D's to evade the responsibilities that the IAA would have put on them and thier reps when dealing with fee based accounts.

The goal of the B/Ds was to create a business model that had all the flavor of fee based but just one calorie.

That is what it has always been about. Creating a "safe space" for all sorts of shady activities. It's the exact same reason AMP and the B/Ds are creating a circus over at the CFP standards comittee over this exact issue.

Either you explicitly act in the best interests of clients, or you don't.

alreit, why do you continue to write that AMP is heading up a "circus" against CFP standards?  Ameriprise is a RIA, with advisors that are IARs under the IAA of 1940.  If you're going to throw stones, make sure you're aiming them correctly.

Ann Wasik, a spokeswoman at Ameriprise Financial Inc., which claims to have the most CFPs of any firm, said a fiduciary obligation for CFP holders is "something that we support given that our advisors fall into that category already." All of Ameriprise's more than 10,000 advisors are registered as investment advisors, she said.

http://www.financialadvisormagazine.com/news.php?id_content= 4&idNews=920

Interesting point.

No doubt there is appropriate registration and disclosure, but my impression is a larger issue.

For " financial planners ", it appears the issue would be the apparent conflicts of interest inherent in the whole broker dealer world.

This mutal fund pays the broker dealer soft dollars for marketing events ( sales contests), that fund pays 12b1 fees in addition to the wrap fee you collect, but another fund pays no 12b1, so you mix ETFs and 12b1 funds, but there is an apparent conflict of interest.

So, while there is appropriate disclosure, I guess the "spirit" of the thing is unresolved.

And also, I notice the newest issue of Investment News talks about 12b1 coming under review, finally.

Where do you think all of this is going?

Does any broker dealer have the right to maintain the current structure, with appropriate disclosure? Apparently, and reps could choose to feel good about it all.

But some will choose to focus on the apparent conflict of interest issuces, I don' think it makes one a better or worse person, but there are these nagging questions...

I don’t think 12b-1 fees will ever go away, nor should they.  I do think that 12b-1 fees will be itemized in dollars and a percent on every statement which is a good thing.<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

They couldn't just go away overnight. I'll bet the old funds would be held, and new $$$ would just go into wrap, at the most extreme.

[quote=AllREIT] [quote=mikebutler222][quote=AllREIT] [quote=mikebutler222]

[quote=Vin Diesel]the problem is brokers didn't place their most active trading clients in these accounts,  they placed their least active clients.[/quote]

Now there's a theory I hadn't heard before....

[/quote]

That's why NASD said the Fee-in-leiu accounts were unsuitable for most clients.

[/quote]

You got a source for that?

[/quote]

As early as 2003 NASD was on to this problem.

http://www.nasd.com/web/groups/rules_regs/documents/notice_t o_members/nasdw_003079.pdf

This industry moves very slowly on things that might be profitable to it.
[/quote]

Nice dodge, but NO WHERE in that report does the NASD say "Fee-in-leiu accounts were unsuitable for most clients.". In fact, it mentions that the Tully report considered these accounts among its "best practices" and goes on to thay they're not appriate in ALL circumstances.

So, I ask again, when did the NASD say "the Fee-in-leiu accounts were unsuitable for most clients"?

[quote=AllREIT] [quote=Dust Bunny]

A RR can recommend either one since they are both "suitable"

Although it seems like splitting hairs in some respects; this is my take on the issue too. 

[/quote]

The suitablity standard also opened up a can of worms since it was so vague pretty much any non-leveraged liquid investment could be defended as suitable.

Broker: Well, I thought it was going to go up.

NASD: I understand.
[/quote]

Wow, you don't have much of a grasp of the concept of suitability...

[quote=Big Taco]

Ann Wasik, a spokeswoman at
Ameriprise Financial Inc., which claims to have the most CFPs of any
firm, said a fiduciary obligation for CFP holders is “something that we
support given that our advisors fall into that category already.” All
of Ameriprise’s more than 10,000 advisors are registered as investment
advisors, she said.

http://www.financialadvisormagazine.com/news.php?id_content= 4&idNews=920

[quote=Mike Damone]<p =“Msonormal” style=“margin: 0in 0in 0pt;”>I don’t think 12b-1 fees will ever go away, nor should they.  I do think that 12b-1 fees will be itemized in dollars and a percent on every statement which is a good thing.<o:p></o:p>

[quote=mikebutler222]

Wow, you don’t have much of a grasp of the concept of suitability…

[quote=AllREIT] [quote=Big Taco]

Ann Wasik, a spokeswoman at Ameriprise Financial Inc., which claims to have the most CFPs of any firm, said a fiduciary obligation for CFP holders is "something that we support given that our advisors fall into that category already." All of Ameriprise's more than 10,000 advisors are registered as investment advisors, she said.

http://www.financialadvisormagazine.com/news.php?id_content= 4&idNews=920

[/quote]

Because, AMP'er don't wear the IAR hat all of the time. E.g when they are selling IDS Life or RVS Funds etc etc. The IAR is needed when representing RIA's who offer SMA's (e.g an investment product that is not a security), it is not needed for selling securities (covered by the 7)

The CFP boards want CFP's to act in the best interests of clients all of the time, and not be able to pick and choose.

E.g

AMPer: This external SMA could be a good choice for you (wearing IAR hat ) but I recomend this VUL contract instead since I get paid 6% on it. (not wearing IAR hat ).
[/quote]

Speaking of Ameriprise, how is it possible that all those CFP's can act as fiduciaries, while peddling mostly proprietary product. It baffles me that they get away with that, but ML SB ET AL, is no longer allowed to offer a fee based account in which you can invest in hundreds of MF's from hundreds of different fund families.

[quote=AllREIT] [quote=mikebutler222]

Wow, you don't have much of a grasp of the concept of suitability...

[/quote]

Have you contemplated that perhaps you know less about suitability than you think?
[/quote]

I not only understand suitability, I know what the NASD means by the term. Your little;

REP: "I thought it would go up"

NASD: "I understand"

routine bears no resemblemse to the reality of the NASD or arbitration.

Speaking of Ameriprise, how is it possible that all those CFP's can act as fiduciaries, while peddling mostly proprietary product.

They aren't acting as fiduciaries.

[quote=mikebutler222]

I not only understand suitability, I know what the NASD means by the term. Your little;

REP: "I thought it would go up"

NASD: "I understand"

routine bears no resemblemse to the reality of the NASD or arbitration.

[/quote]

Sarcasm?

Although what I describe does happen more than NASD would like to admit, since suitability is such a plastic concept.

[quote]In recommending to a customer the purchase, sale or exchange of any security, a member shall have reasonable grounds for believing that the recommendation is suitable for such customer upon the basis of the facts, if any, disclosed by such customer as to his other security holdings and as to his financial situation and needs.[/quote]

[quote=AllREIT]

[quote=mikebutler222]

I not only understand suitability, I know what the NASD means by the term. Your little;

REP: "I thought it would go up"

NASD: "I understand"

routine bears no resemblemse to the reality of the NASD or arbitration.

[/quote]

Sarcasm?

Although what I describe does happen more than NASD would like to admit, since suitability is such a plastic concept.

[quote]In recommending to a customer the purchase, sale or exchange of any security, a member shall have reasonable grounds for believing that the recommendation is suitable for such customer upon the basis of the facts, if any, disclosed by such customer as to his other security holdings and as to his financial situation and needs.[/quote]

[quote=AllREIT] [quote=mikebutler222] <?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

I not only understand suitability, I know what the NASD means by the term. Your little;

REP: "I thought it would go up"

NASD: "I understand"

routine bears no resemblance to the reality of the NASD or arbitration.

[/quote]

Sarcasm?

Although what I describe does happen more than NASD would like to admit, since suitability is such a plastic concept. [/quote]

You simply do not know what you're talking about. "I thought it would go up" is what a fool would say at an arbitration hearing, just before the NASD cut his head off.

[quote=AllREIT] [quote]In recommending to a customer the purchase, sale or exchange of any security, a member shall have reasonable grounds for believing that the recommendation is suitable for such customer upon the basis of the facts, if any, disclosed by such customer as to his other security holdings and as to his financial situation and needs.[/quote]

This issue is what are "reasonable grounds" and how that relates to buisness model in which you get paid on basis of "purchase, sale or exchange" of securities.

[/quote]

You’re confusing the method by which the rep is paid with the suitability of the particular investment itself. An example; whether it’s a commission account of a fee in lieu of account, putting 45% of an elderly client’s money in a BRIC ETF is a suitability issue.

Seriously ALLREIT, we can disagree about passive versus active management, but your comments thus far on the subject of fee in lieu of commission accounts, the NASD’s approach to suitability and the claim that a rep’s legal responsibility is first to the firm have proved, to me at least, you have no idea what you’re talking about.

Here's an example of where ALLREIT and the "you have to be acting as a fiduciary to be acting in the client's best interests" crowd misses the point.<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

 As a rep, you could have purchased Google as an IPO (assuming your firm was part of the deal) for a client. As a fiduciary, you couldn't have. Now, tell me how cutting  clients, wholesale as a regulatory issue, out of all IPOs, to include Google, is "in the client's best interests"?

If it isn’t clear to so of you, this entire debate over the term “fiduciary” is a turf war that aligns the FPA and some RIAs against the firms offering fee in lieu of accounts because they loathed the fact that they could no longer point to the commission structure of brokerage accounts and the inherent conflict of interest there.

In fact, the Tully report that reviewed rep compensation specifically pointed to fee in lieu of accounts, said they align the interests of brokers and clients in most cases, and called them a “best practices” item. The NASD pdf that ALLREIT supplied, contrary to his claims, didn’t say fee in lieu of accounts are inappropriate for most clients, they said the opposite, their caution being that these accounts aren’t appropriate for ALL accounts.

It’s a turf war, folks, and the claims of some in the industry to be “looking out” for clients is a charade…

[quote=pratoman][quote=AllREIT] [quote=Big Taco]

Ann Wasik, a spokeswoman at Ameriprise Financial Inc., which claims to have the most CFPs of any firm, said a fiduciary obligation for CFP holders is "something that we support given that our advisors fall into that category already." All of Ameriprise's more than 10,000 advisors are registered as investment advisors, she said.

http://www.financialadvisormagazine.com/news.php?id_content= 4&idNews=920

[/quote]

Because, AMP'er don't wear the IAR hat all of the time. E.g when they are selling IDS Life or RVS Funds etc etc. The IAR is needed when representing RIA's who offer SMA's (e.g an investment product that is not a security), it is not needed for selling securities (covered by the 7)

The CFP boards want CFP's to act in the best interests of clients all of the time, and not be able to pick and choose.

E.g

AMPer: This external SMA could be a good choice for you (wearing IAR hat ) but I recomend this VUL contract instead since I get paid 6% on it. (not wearing IAR hat ).
[/quote]

Speaking of Ameriprise, how is it possible that all those CFP's can act as fiduciaries, while peddling mostly proprietary product. It baffles me that they get away with that, but ML SB ET AL, is no longer allowed to offer a fee based account in which you can invest in hundreds of MF's from hundreds of different fund families.

[/quote]

I can't speak for "all those CFP's", but proprietary products are not a significant portion of my book.  And most of my prop business is from our VAs, the only products that I'm captive on, but I don't mind, because we have good VA product:  lower than average M&E, good subaccount selection, and Morningstar heads an AA service based on risk tolerance with quarterly rebalance.

A significant portion of my book is made up of fee based accounts where I can offer hundreds of MF's from hundreds of different fund families".

[quote=mikebutler222]

Here’s an example of where ALLREIT and the “you have to be acting as a fiduciary to be acting in the client’s best interests” crowd misses the point.<o:p></o:p>

 As a rep, you could have purchased Google as an IPO (assuming your firm was part of the deal) for a client. As a fiduciary, you couldn't have. Now, tell me how cutting  clients, wholesale as a regulatory issue, out of all IPOs, to include Google, is "in the client's best interests"?

If it isn’t clear to so of you, this entire debate over the term “fiduciary” is a turf war that aligns the FPA and some RIAs against the firms offering fee in lieu of accounts because they loathed the fact that they could no longer point to the commission structure of brokerage accounts and the inherent conflict of interest there.

In fact, the Tully report that reviewed rep compensation specifically pointed to fee in lieu of accounts, said they align the interests of brokers and clients in most cases, and called them a “best practices” item. The NASD pdf that ALLREIT supplied, contrary to his claims, didn’t say fee in lieu of accounts are inappropriate for most clients, they said the opposite, their caution being that these accounts aren’t appropriate for ALL accounts.

It’s a turf war, folks, and the claims of some in the industry to be “looking out” for clients is a charade…

[quote=joedabrkr] [quote=mikebutler222]

Here's an example of where ALLREIT and the "you have to be acting as a fiduciary to be acting in the client's best interests" crowd misses the point.

 As a rep, you could have purchased Google as an IPO (assuming your firm was part of the deal) for a client. As a fiduciary, you couldn't have. Now, tell me how cutting  clients, wholesale as a regulatory issue, out of all IPOs, to include Google, is "in the client's best interests"?

If it isn’t clear to so of you, this entire debate over the term “fiduciary” is a turf war that aligns the FPA and some RIAs against the firms offering fee in lieu of accounts because they loathed the fact that they could no longer point to the commission structure of brokerage accounts and the inherent conflict of interest there.

In fact, the Tully report that reviewed rep compensation specifically pointed to fee in lieu of accounts, said they align the interests of brokers and clients in most cases, and called them a “best practices” item. The NASD pdf that ALLREIT supplied, contrary to his claims, didn’t say fee in lieu of accounts are inappropriate for most clients, they said the opposite, their caution being that these accounts aren’t appropriate for ALL accounts.

It’s a turf war, folks, and the claims of some in the industry to be “looking out” for clients is a charade…

[/quote]

Considering how hard it was to get shares in any size on the GOOG deal, that's somewhat of a red herring don't you think?
[/quote]

No, joe, I really don't. The issue of a total and arbitrary prohibition on all IPOs, under the pretense that acting as a fiduciary is the only way to act in a client’s best interest isn’t dependent on the size or availability of a specific offering. It’s an issue of principle. <?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

I'm not sure how "suitable" vs. "best interest of client" has much meaning.

Yes, there is a big difference and I understand the difference.  However, an ethical RR will do what is best for his client.  An unethical RIA will do what's best for himself.

[quote=AllREIT] [quote=Big Taco]

Ann Wasik, a spokeswoman at Ameriprise Financial Inc., which claims to have the most CFPs of any firm, said a fiduciary obligation for CFP holders is "something that we support given that our advisors fall into that category already." All of Ameriprise's more than 10,000 advisors are registered as investment advisors, she said.

http://www.financialadvisormagazine.com/news.php?id_content= 4&idNews=920

[/quote]

Because, AMP'er don't wear the IAR hat all of the time. E.g when they are selling IDS Life or RVS Funds etc etc. The IAR is needed when representing RIA's who offer SMA's (e.g an investment product that is not a security), it is not needed for selling securities (covered by the 7)

The CFP boards want CFP's to act in the best interests of clients all of the time, and not be able to pick and choose.

E.g

AMPer: This external SMA could be a good choice for you (wearing IAR hat ) but I recomend this VUL contract instead since I get paid 6% on it. (not wearing IAR hat ).
[/quote]

allreit, I'm starting to feel that you wear two hats at the same time, all the time:  an IAR hat, and a Holier than Thou hat. 

On average, I sell about one or two VUL contracts a year.  the last one I sold was a Lincoln, because it had lower COI.  The VUL was part of an estate plan for a wealthy client.  This client meets with me regularly, and we will review this policy annually.  Did I take my IAR hat off on that one?  And since most of my book is fee'd, your SMA/VUL hypo sounds foolish to me.

allreit, I believe you're painting with a broad brush to whitewash the fact that you've been claiming that AMP is "heading a circus" to fight the CFP board.  AMP spokeswoman says exactly the opposite publicly:

Ann Wasik, a spokeswoman at Ameriprise Financial Inc., which claims to have the most CFPs of any firm, said a fiduciary obligation for CFP holders is "something that we support given that our advisors fall into that category already." All of Ameriprise's more than 10,000 advisors are registered as investment advisors, she said.

http://www.financialadvisormagazine.com/news.php?id_content= 4&idNews=920

What I think this means is that for all the CFPs that work at ameriprise, AMP apparently supports them having to wear their "Fiduciary IAR hat" all day, every day.

What I think this means is that for all the CFPs that work at ameriprise, AMP apparently supports them having to wear their "Fiduciary IAR hat" all day, every day.

This isn't accurate at all.  When they are selling products, they are acting as RR's and are not fiduciaries. 

[quote=anonymous]an ethical RR will do what is best for his client.  An unethical RIA will do what's best for himself.[/quote]

I agree wholeheartedly. 

[quote=Big Taco]

I can’t speak for “all those CFP’s”, but proprietary products are not a significant portion of my book. 

Good point, Allreit.

Taco, remember Ronald Reagan was considered to be " cold " for suggesting folks " vote with their feet " to deal with the challenges of a shifting economy (auto workers moved to the South to stay employed at lower wages).

It appears you have a very unpleasant burden to bear in your affiliation with a broker dealer that manufactures products. It doesn't make you bad, but it seems like a losing battle.

[quote=AllREIT] [quote=Big Taco]

I can't speak for "all those CFP's", but proprietary products are not a significant portion of my book. 

[/quote]

Taco, you aren't the typical AMP'er we are all razzing on.

We're razzing on the P1, AMP trainee's/kool-aide drinkers who have been sent into the world to sell as much IDS VUL as possible.


[/quote]

Okay, I apologize if I'm overly defensive.

I don't like P1 either, and the company's actually getting rid of it in some market groups, and merging others.  Hopefully this is a trend. 

But P1 is only 30% of the advisors.  Most of the P2 advisors I know have primarily fee based practices (wrap accounts and advisory fees).

Change happens slowly for the suits.

My impression is, AMP has chosen their strategy, but they are taking a big gamble.

You, Taco, wake up tomorrow, and find yourself able to say, " I'm a fee only advisor ".

You don't have to defend all of that broker dealer crap.

You get paid more, with less money (small accounts?) under management.

People who hear you are a good advisor are not deterred by all of the confusion and skeletons when they take a closer work.

I am only shocked at how apparently blind or at least noncommunicative the suits are regarding reality. Broker dealers ( overall, not LPL) are growing at negative 5% and RIAs are growing at 30%.

You can call yourself a professional anywhere, but it appears RIA is more fun.

a closer look

[quote=Big Taco][quote=AllREIT] [quote=Big Taco]

I can't speak for "all those CFP's", but proprietary products are not a significant portion of my book. 

[/quote]

Taco, you aren't the typical AMP'er we are all razzing on.

We're razzing on the P1, AMP trainee's/kool-aide drinkers who have been sent into the world to sell as much IDS VUL as possible.


[/quote]

Okay, I apologize if I'm overly defensive.

I don't like P1 either, and the company's actually getting rid of it in some market groups, and merging others.  Hopefully this is a trend. 

But P1 is only 30% of the advisors.  Most of the P2 advisors I know have primarily fee based practices (wrap accounts and advisory fees).

Are they still doing the fishbowl lunches?

Hey Mike read line two.  This is fresh off the Morgan Stanley site and says everything very well.

A major stopping point for the wirehouses with regards to the fee-in-lieu-of-commissions accounts, I would think, is that clients have been making unsolicited transactions in them for years now.  I don't think the wirehouses would have any problems transitioning clients to fiduciary accounts if they didn't contain no-opinion securities, etc.  (I am sure that more than one of these accounts has been ACAT'd because the client mad a bad 'free' trade and blamed it on the platform.)

And AllREIT, why do you even charge a fee at all?  That can't be in the client's best interest.

Here is a thought:

Why couldn't these wirehouses jack up their commissions to make the wrap accounts nearly always more cost effective.  They could still apply (massive) discounts to those clients who desired transactional service.

[quote=piker]

And AllREIT, why do you even charge a fee at all?  That can’t be in the client’s best interest.

[quote=drewski803]

Here is a thought:

Why couldn't these wirehouses jack up their commissions to make the wrap accounts nearly always more cost effective.  They could still apply (massive) discounts to those clients who desired transactional service.

Kind of like Kodak was trying to keep the old film and film processing business alive. Profit max.

The point is, the b/d model is dying, and the regulators basically assume you are a scumbag if you are a broker, since there are so many built in conflicts of interest. It all started back when, if you wanted to buy stocks, you had to go through a brokerage firm. Things have changed a bit since then.

[quote=rialsoon]

Kind of like Kodak was trying to keep the old film and film processing business alive. Profit max.

The point is, the b/d model is dying, and the regulators basically assume you are a scumbag if you are a broker, since there are so many built in conflicts of interest. It all started back when, if you wanted to buy stocks, you had to go through a brokerage firm. Things have changed a bit since then.

[/quote]

That is why I don't do a strictly transactional business.  If all you do is sell stocks, mutual funds and bonds you will be providing not much value to the client.

I’m sure your clients are attracted to your experience and advice - big picture skills and leadership. So broker dealer or RIA, things are converging from the client’s point of view. But I think competition/awareness/evolution are saying, there is room for a client to pay us a fee for advice and service, but the money the profit margins are being compressed, and that is why LPL is paying 90% to the rep, and things like annuities that pay 8% commission, no matter what you think of them, these are coming under increasing scrutiny just from a cost point of view, and so what Allreit is saying, even though the broker dealers are fighting the rear guard, it is an exit strategy, and what will be left is us servicing our clients under more efficient platforms, helped along by the regulators and increasingly lobbyists for non broker dealer interests, and it will look like the demise of the old kind of photography from a business textbook case point of view. It will end, as the financial planning profession sees it, with the crucifixion of traditional insurance company products and jobs and behaviours like Bobby’s.

[quote=rialsoon]I'm sure your clients are attracted to your experience and advice - big picture skills and leadership. So broker dealer or RIA, things are converging from the client's point of view. But I think competition/awareness/evolution are saying, there is room for a client to pay us a fee for advice and service, but the money the profit margins are being compressed, and that is why LPL is paying 90% to the rep, and things like annuities that pay 8% commission, no matter what you think of them, these are coming under increasing scrutiny just from a cost point of view, and so what Allreit is saying, even though the broker dealers are fighting the rear guard, it is an exit strategy, and what will be left is us servicing our clients under more efficient platforms, helped along by the regulators and increasingly lobbyists for non broker dealer interests, and it will look like the demise of the old kind of photography from a business textbook case point of view. It will end, as the financial planning profession sees it, with the crucifixion of traditional insurance company products and jobs and behaviours like Bobby's. [/quote]

If that's what you have to tell yourself to avoid the fear of good salesmen, I'm all for it. How well did Al Gore and John Kerry do when they whined about the competition?

Nothing personal.  Ironic that you use the example of liberal whining to try to prop up what market forces must inevitably tear down. You will either adapt or pitch something that " pays ".

[quote=rialsoon]Nothing personal.  Ironic that you use the example of liberal whining to try to prop up what market forces must inevitably tear down. You will either adapt or pitch something that " pays ". [/quote]

These market forces you're talking about....? Why does my business keep expanding? According to you, it should be shrinking. As long as you kids are wrapping fees around MF's and stocks, I'll be just fine. "The FIRST thing I'm gonna do is turn off the broker meter for you..."

" The first thing I'm gonna do is get rid of the broker dealer for you. And in the case of Bobby, he gets a big commission up front - about seven years pay up front, to be precise. Oh yeah, his insurance company spends the next seven years squeezing that money - plus a lot more - and remember, this is a contract, you share your experience with the other insureds, so the insurance company can't lose.

And then there is the broker dealer story, and all of their cozy relationships and arrangments....

Most people who want to work with and advisor don't mind paying, but they want to pay as they go along.

Bobby will say his plan is cheaper - of course that annuity contract is sucking out plenty of money - and since Bobby gets paid up front, thinks it's stupid to be a CFP, you know, a real professional planner that give comprehensive advice and insight as we go along, well, you may have trouble getting Bobby's attention if you need help with other things.

An guess what, in about seven years, Bobby will be asking you to roll into a new contract - you'll be locked in again, and the likehood that your costs will go down is - small - since Bobby will earn another seven year paycheck.

On the other hand, you've heard me, and you know Bobby, so now you have a choice. And if you want to work with Bobby, I think that's great!

[quote=rialsoon]

" The first thing I'm gonna do is get rid of the broker dealer for you. And in the case of Bobby, he gets a big commission up front - about seven years pay up front, to be precise. Oh yeah, his insurance company spends the next seven years squeezing that money - plus a lot more - and remember, this is a contract, you share your experience with the other insureds, so the insurance company can't lose.

And then there is the broker dealer story, and all of their cozy relationships and arrangments....

Most people who want to work with and advisor don't mind paying, but they want to pay as they go along.

Bobby will say his plan is cheaper - of course that annuity contract is sucking out plenty of money - and since Bobby gets paid up front, thinks it's stupid to be a CFP, you know, a real professional planner that give comprehensive advice and insight as we go along, well, you may have trouble getting Bobby's attention if you need help with other things.

An guess what, in about seven years, Bobby will be asking you to roll into a new contract - you'll be locked in again, and the likehood that your costs will go down is - small - since Bobby will earn another seven year paycheck.

On the other hand, you've heard me, and you know Bobby, so now you have a choice. And if you want to work with Bobby, I think that's great!

[/quote]

I won't have to say a thing...I'll just tape a note to the back of a dog...

Most people who want to work with and advisor don't mind paying, but they want to pay as they go along.

I don't agree.  If you said that most people want to work with someone earning up front commissions, I also wouldn't agree.

Your clients work with you because they like you and trust you and feel that you can do a good job for them.  It has very little to do with how you get compensated.

[quote=$ N the Bank]

Hey Mike read line two.  This is fresh off the Morgan Stanley site and says everything very well.

[/quote]

Is any of that supposed to be news?

[quote=anonymous]

Most people who want to work with and advisor don't mind paying, but they want to pay as they go along.

I don't agree.  If you said that most people want to work with someone earning up front commissions, I also wouldn't agree.

Your clients work with you because they like you and trust you and feel that you can do a good job for them.  It has very little to do with how you get compensated.

[/quote]

Commisions let people feel like they are in control of what they are paying.

Let's take a closer look.

Okay, Bobby has an annuity here that has no surrender charge. The total expenses to you, if it was all invested in the stocks of large companies, for example, is about 2.4% .

And you get certain guarantees, in this case, if you die, your heirs will never get less than what you put in. Is that important to you?

Bobby still gets paid up front, and he still thinks it's stupid for a financial planner to be a Certified Financial Planner Practitioner, 'cause he's busy looking for the next sale ( he makes a lot of money, but he wastes a lot of it in taxes).

Now, if we get rid of the broker dealer, and the insurance company, will pay me 1% as we go along. This will be deducted from your account, unfortunately, I have a lot of costs, but I'm still well paid and focused on you and my other good, long term clients that all come to me by referral, in this case from your CPA.

And that suggests that your CPA understands the comparative advantage of getting rid of the broker dealer. Not just costs, but all of the other apparent conflicts of interst.

Anyway, you pay 1%, plus the exchange traded fund we'll be using costs another .2%. And every time we trade a fund, you will be charged about ten bucks.

So that's about 1.2% vs. 2.4%, but that is not where the story ends. The reason my program is better than Bobby's is, since he gets paid up front, that could be a problem. The other thing is, his broker dealer has some revenue sharing arrangements with certain preferred companies over on the mutual side, that may not apply here, but you probably don't want all of your money in annuities, so now we need to look at a few other things.

So that's an extra percent for you.

We could take a little less risk to get the same potential return to you, or we could just leave it all in stocks and compound that extra one percent. You know, when you are trying to be a little more conservative with cash, stocks and bonds, and are only trying to get a six percent return or so, that extra one percent is important.

But again, I think we should focus on potential conflicts of interest in this situation, and what is best for you.

No $ N bank,

I have no doubt that if your bank has a fee in lieu of commission account you'll find the same disclosure.....no doubt you feel you have a point in there somewhere...

Commisions let people feel like they are in control of what they are paying.

Mr. client, that sounds nice. As you can see from the example, you are free to pay more, and to pay it all up front. Being the successful business person that you are, as you consider hiring me, how do you feel about paying me several years salary in advance?

Your clients work with you because they like you and trust you and feel that you can do a good job for them.  It has very little to do with how you get compensated.

I totally agree about liking and trust.

It has very little to do with how you get compensated.

That is a great leap, my friend. Do you have a responsibility to stay sharp in knowledge and skills? Okay, you have to explain costs and let the client choose. How advisors are explaining the true ramifications of fee only? Here is where the lie begins.

But if you are truely honest, you right and tall. A better question might be, why defend the right for broker dealers to carve out an extra one percent for the home office?

Anyway, my only point to Bobby is, the market is deciding. Last year broker dealers grew at about negative five percent overall, and RIAs grew at about 30%.

Not saying one is better than the other, and I think all deserve the respect of their colleagues, for sure. Mainly, because most are entrapped in a burning building. Bobby is probably just close to retirement, anyway.

I walk both sides of the fence.  Sometimes I earn commissions.  Sometimes I earn fees.  I really just don't think that the client cares.  It's like "A" shares vs. "C" shares.  If I tell my client to use an "A" share, they'll do it.  If I tell them to use a "C" share, they'll do it.  If I recommend that we use an advisory account, they'll do it.  If I recommend an annuity, they'll do it.  In fact, the same client may have all of the above. 

The client works with me because they like me and trust me to do what is in their best interest.  Nobody is working with me because I tell them that I charge less.  I've never lost business because someone else charges less.

I understand and respect your POV, and also pragmatism, since that outlook is born out of necessity, in part.

Bottom line, anything that reduces costs for advisors and maintains or increases payout for advisors is good.

I guess the conflict of interest point is more subtle for most here. But it won't go away.

( And here I'm speaking about preferred funds, for example, on b/d advisory accout platforms, that have revenue sharing arrangements, for example.)

The implication is that broker dealers have the potential to clean up their act, but probably won't.

Anyway, for those who don't care to make any of these distinctions, you could say the client probably deserves to pay more, it's just my observation that even common $350,000 wrap account clients now are saying things like, " I've heard your advisor should be fee only, but I trust you to tell me what to do. "

Ironically, A shares are probably one of the cleanest and best regulated vehicles around, so we are not talking in absolutes here.

We all just need to do what is best for your clients, I just don't see where the big home office fits in for the future. For example, is some areas like Southern California, a lot of people with money are on to the whole broker dealer racket ( which in my opinion extracts about and extra 1 % beyond advisor compensation out of the client advisor relationhship. If that is not important to some advisors, then God bless).

Mr. client, we are transferring this account from a broker dealer custodian to a registered investment advisor custodian.

We are reducing your costs by up to 50%, but let's just say an average 25% cost reduction to you, in terms of wrap fees, to be safe.

I will paid roughly the same, or maybe a little more, so you don't have to worry about me being motivated to help you protect and grow your money.

More importantly, in my view, as a Certified Financial Planner Practitioner licensee, all of the inherent and apparent conflicts of interest associated with affiliation with a broker dealer will be eliminated.

The custodion is a large and important national financial services firm. Our relationship, my responsibilities to you and your job and expectations, are clearly laid out and documented.

The best part is, everything is simplified. And that will help us reach your goal of being financially independent for a long, long time.

And please tell your friends that I am working as a fee only financial advisor - they may have some questions about how their financial accounts are currently being managed.

[quote=rialsoon]

Mr. client, we are transferring this account from a broker dealer custodian to a registered investment advisor custodian.

We are reducing your costs by up to 50%, but let's just say an average 25% cost reduction to you, in terms of wrap fees, to be safe.

I will paid roughly the same, or maybe a little more, so you don't have to worry about me being motivated to help you protect and grow your money.

More importantly, in my view, as a Certified Financial Planner Practitioner licensee, all of the inherent and apparent conflicts of interest associated with affiliation with a broker dealer will be eliminated.

The custodion is a large and important national financial services firm. Our relationship, my responsibilities to you and your job and expectations, are clearly laid out and documented.

The best part is, everything is simplified. And that will help us reach your goal of being financially independent for a long, long time.

And please tell your friends that I am working as a fee only financial advisor - they may have some questions about how their financial accounts are currently being managed.

[/quote]

Great stuff, but how do you get past my average annual return of 25%, after ALL fees?

rialsoon, can you say what you wrote while keeping a straight face?

Also, since you are fee-only, is it safe to assume that you don't help your clients with insurance issues?

Yes.

Yes.

Bobby, unless you are God, I suggest some basic finance courses at an accredited college might be a real benefit to your clients.

[quote=rialsoon]

And please tell your friends that I am working as a fee only financial advisor - they may have some questions about how their financial accounts are currently being managed.

[/quote]

Yawn... the "I'm more ethical since I'm a fee only advisor" stuff is already wearing thin. I'll tip my hat to the first holier-than-thou "fee only" guy that's really ethical and proves it by ;

1)having the returns in his asset management accounts audited

2) recommends to clients and prospects that they not use him for asset management because his returns are below industry averages.

[quote=anonymous]

rialsoon, can you say what you wrote while keeping a straight face?

Also, since you are fee-only, is it safe to assume that you don't help your clients with insurance issues?

[/quote]

He sounds pretty fired up here, as a "real soon RIA" running a flat-fee business. Perhaps we should talk with him again after he's actually tried to pay his mortgage running that business model.

Wow, pretty hard-hitting stuff there, Mike.

After specifically making the point, above, that this is not about holier than thou, I must question your reading comprehension, as they say.

The rest just looks like sour grapes.

But confusing the moral issue with the substance is the beginning of a lie.

rialsoon, you have a pretty snotty attitude for someone who seems to be pretty new in the business. 

 And here I'm speaking about preferred funds, for example, on b/d advisory accout platforms, that have revenue sharing arrangements, for example

And here you don't really know what you are talking about.  Many firms have preferred partner funds or some other name for them.  In my case it means my ticket charges are 10 instead of 12$ per trade.  Big whoop.  Even in the case of the notorious Jones preferred funds, the rep didn't get paid any differently from preferred to non preferred fund.  All it meant was the preferred families got more face time in front of the reps.....Big whoop again.  There was no real conflict of interest in having funds that paid for shelf space on the part of the reps.....maybe the firm, but not the reps.

So, I have a client who has 200K to invest and we buy a mix of mutual funds, bonds, etfs and uits.  I make an average of 2 ot 2.5% commission on the account.  In most cases we don't do much trading so it may be several years before we need to make any portfolio adjustments.   In the meantime you are charging them a fee assessed quarterly.  

Your conflict of interest comes when the client begins to wonder just what it is that you are doing to earn that $2000 to $2500 every year.......so you start to move the portfolio so it looks like you are doing something.  Moving the portfolio to look busy isn't necessarily in the best interest of the client, but that's how the fee based accounts seem to work.  Busy work to justify the fees.

More importantly, in my view, as a Certified Financial Planner Practitioner licensee, all of the inherent and apparent conflicts of interest associated with affiliation with a broker dealer will be eliminated.

Untrue.

Also, since you are fee-only, is it safe to assume that you don't help your clients with insurance issues?

Since you said, yes I assume you advise them to go to an insurance agent for all of their other financial planning needs since you are basically a product and investment pusher?  How can you possibly claim to be a financial planner CFP or otherwise if you don't assist your clients with their insurance needs.  Do you even know what I'm talking about?

[quote=rialsoon]

Wow, pretty hard-hitting stuff there, Mike.

After specifically making the point, above, that this is not about holier than thou, I must question your reading comprehension, as they say.

The rest just looks like sour grapes.

But confusing the moral issue with the substance is the beginning of a lie.

[/quote]

If you can read this line of yours;

"And please tell your friends that I am working as a fee only financial advisor - they may have some questions about how their financial accounts are currently being managed. "

As anything other than a holier-than-thou pitch line to clients and potential referrals, I question your reading comprehension.

I think the bottom line is, having read some of Allreits posts,and when sitting with clients and explaining the way things really work, it's just kind of funny to think that guys like Mike take sort of this corporate view of things.

You would think that financial advisor would want to be clever with money, but of course only to the extent that it does not threaten the status quo.

I see the whole ethics issue as a sort of muddling of reality (from both sides) - but ultimately to the benefit of b/ds, aka the Merrill Lynch rule fiasco.

But this is the registered rep union hall, I guess, so if this bothers you and you just want to lash out like Mike, save yourself.

rialsoon, 

Many of us are already able to do fee based accounts.  You aren't as special as you would like to think you are. I'm sitting for the 65 in the end of June and have completed the CFP training and plan to convert some (not all) of my clients to fee based.  Many will continue to be commission accounts and some will have both types of accounts with me.

You're preaching to the choir. Too bad you seem to be a one note song.

Dusty Bunny baby, your first sentence assumes an awful lot, more than you could know.

You need to learn more about the money mutual funds pay companies like LPL, even commonwealth.

How can you possibly claim to be a financial planner CFP or otherwise if you don't assist your clients with their insurance needs.  Do you even know what I'm talking about?

As a matter of fact, as a CFP, I study insurance quite a bit. It is one of the major areas of financial planning, as I think you know. Don't get your question.

Yeah Mike, I thought about that "managed" when I wrote it, and could have said managed and administered, and went for brevity. Please don't assume I am dissing your money management skills, I tried to make it clear we should all be respected as professionals.

I'm 66/7 licensed and have advisory platforms and brokerage platforms.  Typically, I use the brokerage platforms with C shares because its easier on my side and is actually cheaper for the client (1% 12b1 vs. 1.25% wrap fee).  I think you're narrow-minded if you think that a wrap fee is always cheaper.  Anyone who has 6 months experience in this business should know that (using brokerage examples that replicated pay-over-time that you pitch) an A share is cheaper than a C share for the client if they are holding the fund for 5 years or longer.

Same concept applies to a 1.5% commission vs. an annual 1% fee, unless you churn your advisory accounts like hell.

[quote=rialsoon]

Dusty Bunny baby, your first sentence assumes an awful lot, more than you could know.

You need to learn more about the money mutual funds pay companies like LPL, even commonwealth.

How can you possibly claim to be a financial planner CFP or otherwise if you don't assist your clients with their insurance needs.  Do you even know what I'm talking about?

As a matter of fact, as a CFP, I study insurance quite a bit. It is one of the major areas of financial planning, as I think you know. Don't get your question.

Yeah Mike, I thought about that "managed" when I wrote it, and could have said managed and administered, and went for brevity. Please don't assume I am dissing your money management skills, I tried to make it clear we should all be respected as professionals.

Dusty Bunny baby, your first sentence assumes an awful lot, more than you could know.

rial son,  No, I am quite correct in my assumption. You are a little snot.

As a matter of fact, as a CFP, I study insurance quite a bit. It is one of the major areas of financial planning, as I think you know. Don't get your question.

A little text book studying doesn't qualify you to have rookie level knowledge when it comes to insurance.  Regardless, I have no idea how you will consider yourself a "financial advisor" when insurance issues are going to get ignored.  Shouldn't you call yourself an "investment advisor"?

First of all, I did not post here to diss anyone, or challenge anyone's ethics.

Second, as a seasoned CFP insurance salesman with years of b/d affiliation, the question about addressing insurance needs at RIA is silly.

Third, Dust Bunny is quick with the labels, that is disappointing.

And Joe, my point is not absolute, as I took pains to point out. I think we are beating this to death, and if anyone can find a jewel in my observations, great, otherwise, sorry I stepped on this little hornet's nest.

I respect you all, except Bobby.

Happy summer to all !

[quote=rialsoon]I think the bottom line is, having read some of Allreits posts,and when sitting with clients and explaining the way things really work, it’s just kind of funny to think that guys like Mike take sort of this corporate view of things.

You would think that financial advisor would want to be clever with money, but of course only to the extent that it does not threaten the status quo.

I see the whole ethics issue as a sort of muddling of reality (from both sides) - but ultimately to the benefit of b/ds, aka the Merrill Lynch rule fiasco.

But this is the registered rep union hall, I guess, so if this bothers you and you just want to lash out like Mike, save yourself.[/quote]

RS, I'm not here to debate fee vs. commissions as much as I am curious as to what is motivating you to leave your B/D and take only the fee side of your book.  While I went the indy route, I briefly considered the RIA route, but (1) was a bit intimidated by the compliance and legal issues involved in setting one up and (2) hated to leave some clients behind or worse yet, be able to service only part of some households.

If you don't mind sharing, I'm curious about your background, what's motivating you to leave your current situation, what kind of situation you're currently in, and whatever else you're comfortable divulging.  It sounds like you've done some due diligence and have made your decision, but I'm curious as to why you decided RIA vs. a good independent B/D.  I don't have an agenda...I'm just curious to know if I missed something when I considered indy B/D vs. RIA, besides the obvious cut that my indy B/D takes off the top in exchange for support/compliance, etc.?

Second, as a seasoned CFP insurance salesman with years of b/d affiliation, the question about addressing insurance needs at RIA is silly.

I didn't question your insurance salesmanship as an RIA.  I questioned your ability to help people with insurance as a fee-only advisor.  These are very different things.

[quote=rialsoon]

I think the bottom line is, having read some of Allreits posts,and when sitting with clients and explaining the way things really work, it's just kind of funny to think that guys like Mike take sort of this corporate view of things.

You would think that financial advisor would want to be clever with money, but of course only to the extent that it does not threaten the status quo.

I see the whole ethics issue as a sort of muddling of reality (from both sides) - but ultimately to the benefit of b/ds, aka the Merrill Lynch rule fiasco.

But this is the registered rep union hall, I guess, so if this bothers you and you just want to lash out like Mike, save yourself.

[/quote]

What all that has to do with your obvious holier-than-thou pitch line is a mystery...

Hey Mike, Find our “Conflict of Interest Disclosure”.  I found yours.

[quote=$ N the Bank]Hey Mike, Find our "Conflict of Interest Disclosure".  I found yours.[/quote]

Either WM has one, or they don't have a fee in lieu of account, there’s no third option. Why should I dig it up for you (assuming you even have an internet presence), is it you figure you don’t have one? If you don’t have one, you have commission accounts, you figure they’re conflict of interest free?<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

What’s with the need to be so cryptic?

[quote=rialsoon]Bobby, unless you are God, I suggest some basic finance
courses at an accredited college might be a real benefit to your
clients. [/quote]



You might benefit from some troll dectection classes.



Bobby is a long time RR troll who uses a persona of an abusive though sucessful annuity shark to annoy and insult everything that moves.



If you ignore him, he will ignore you. The supposed annuities (with 24% CAGRs) that he claims to flog don’t exist. Ignore him.

[quote=AllREIT][quote=rialsoon]Bobby, unless you are God, I suggest some basic finance courses at an accredited college might be a real benefit to your clients. [/quote]

You might benefit from some troll dectection classes.

Bobby is a long time RR troll who uses a persona of an abusive though sucessful annuity shark to annoy and insult everything that moves.

If you ignore him, he will ignore you. The supposed annuities (with 24% CAGRs) that he claims to flog don't exist. Ignore him.


[/quote]

What's your email address? I'll send you a statement. Don't post it if you don't want to feel like an a$$hole, though.

[quote=Bobby Hull]

[quote=AllREIT][quote=rialsoon]Bobby, unless you are God, I suggest some basic finance courses at an accredited college might be a real benefit to your clients. [/quote]

You might benefit from some troll dectection classes.

Bobby is a long time RR troll who uses a persona of an abusive though sucessful annuity shark to annoy and insult everything that moves.

If you ignore him, he will ignore you. The supposed annuities (with 24% CAGRs) that he claims to flog don’t exist. Ignore him.


[/quote]

What's your email address? I'll send you a statement. Don't post it if you don't want to feel like an a$$hole, though.

Bobby, you could always do what I did when someone kept questioning my series 7 score…cover all names, account numbers, etc, scan the rest and post the image here.  I used www.theimagehosting.com to post the image free of charge.  That’s the best way I know of to shut up doubters.

[quote=ManagedMoney] [quote=Bobby Hull]

[quote=AllREIT][quote=rialsoon]Bobby, unless you are God, I suggest some basic finance courses at an accredited college might be a real benefit to your clients. [/quote]

You might benefit from some troll dectection classes.

Bobby is a long time RR troll who uses a persona of an abusive though sucessful annuity shark to annoy and insult everything that moves.

If you ignore him, he will ignore you. The supposed annuities (with 24% CAGRs) that he claims to flog don't exist. Ignore him.


[/quote]

What's your email address? I'll send you a statement. Don't post it if you don't want to feel like an a$$hole, though.

[/quote]

Do your clients know that you send their statements out to complete strangers via the internet?  Have they given you permission to do that?
[/quote]

If it doesn't have their name on it is it their statement? Do you clients know that you ask stupid questions?

[quote=Indyone]Bobby, you could always do what I did when someone kept questioning my series 7 score...cover all names, account numbers, etc, scan the rest and post the image here.  I used www.theimagehosting.com to post the image free of charge.  That's the best way I know of to shut up doubters.[/quote]

I didn't know I could do that. I'm in a quandry, though. I don't want to help any of the a$$holes, but I DO want to rub their noses in it. I've got friends on this board who know what I do and can vouch for me and some of them are doing the same thing. If you want to PM your email address, I'll send you a PDF file.

BH, you don't have to send me a PDF...I know what you're using and can vouch numbers very close to what you're quoting.  I've added the L share to my lineup and the wholesaler is stopping by a week from tomorrow.  The only difference between me and you is that I'll take less up front for the 1% trail in year two.

Oh...and I'm a bit more PC...

[quote=Indyone]

BH, you don't have to send me a PDF...I know what you're using and can vouch numbers very close to what you're quoting.  I've added the L share to my lineup and the wholesaler is stopping by a week from tomorrow.  The only difference between me and you is that I'll take less up front for the 1% trail in year two.

Oh...and I'm a bit more PC...

[/quote]

I've been doing a little L share myself and am moving in that direction. It's not a bad payday and it's much easier to sell than a 7 product. Hell...I've even been selling 5 year surrender EIA's.

Thus far, I've got about 4 mil in L share VAs, which means $40K in trails and proper incentive to continue servicing these accounts...I'm glad you're seeing the light...

Hey, Joeda, your box is full again so I can't answer your question...

[quote=Bobby Hull][quote=ManagedMoney] [quote=Bobby Hull]

[quote=AllREIT][quote=rialsoon]Bobby, unless you are God, I suggest some basic finance courses at an accredited college might be a real benefit to your clients. [/quote]

You might benefit from some troll dectection classes.

Bobby is a long time RR troll who uses a persona of an abusive though sucessful annuity shark to annoy and insult everything that moves.

If you ignore him, he will ignore you. The supposed annuities (with 24% CAGRs) that he claims to flog don't exist. Ignore him.


[/quote]

What's your email address? I'll send you a statement. Don't post it if you don't want to feel like an a$$hole, though.

[/quote]

Do your clients know that you send their statements out to complete strangers via the internet?  Have they given you permission to do that?
[/quote]

If it doesn't have their name on it is it their statement? Do you clients know that you ask stupid questions?

[quote=Bobby Hull]

[quote=Indyone]Bobby, you could always do what I did when someone kept questioning my series 7 score…cover all names, account numbers, etc, scan the rest and post the image here.  I used www.theimagehosting.com to post the image free of charge.  That’s the best way I know of to shut up doubters.[/quote]

I didn't know I could do that. I'm in a quandry, though. I don't want to help any of the a$$holes, but I DO want to rub their noses in it. I've got friends on this board who know what I do and can vouch for me and some of them are doing the same thing. If you want to PM your email address, I'll send you a PDF file.

[quote=ManagedMoney] [quote=Bobby Hull][quote=ManagedMoney] [quote=Bobby Hull]

[quote=AllREIT][quote=rialsoon]Bobby, unless you are God, I suggest some basic finance courses at an accredited college might be a real benefit to your clients. [/quote]

You might benefit from some troll dectection classes.

Bobby is a long time RR troll who uses a persona of an abusive though sucessful annuity shark to annoy and insult everything that moves.

If you ignore him, he will ignore you. The supposed annuities (with 24% CAGRs) that he claims to flog don't exist. Ignore him.[/quote]

What's your email address? I'll send you a statement. Don't post it if you don't want to feel like an a$$hole, though.[/quote]

Do your clients know that you send their statements out to complete strangers via the internet?  Have they given you permission to do that?[/quote]

If it doesn't have their name on it is it their statement? Do you clients know that you ask stupid questions?[/quote]

If it doesn't have their name on it, then it isn't worth the paper it's been made up on.[/quote]

Statements aren't necessary.  Just look for subaccount performance numbers in that ballpark and you should be able to figure out what he's using.  I'm not going to do your homework for you, but it's not all that hard...it's a fairly popular VA.

If it doesn't have their name on it, then it isn't worth the paper it's been made up on.

What's the big deal here?  I do this all the time. I have a presentation booklet for "Sample Customer" made up using real statements and a real portfolio, with the personal information blacked out of course. It includes the Morningstar reports of each asset and lots of other nifty and impressive charts and graphs, stock intersection report etc etc.

It shows the prospect what type of reports and analysis of their accounts that they can expect when they become clients.   This was approved my my compliance department.  I update it every quarter.

[quote=Dust Bunny]

If it doesn’t have their name on it, then it isn’t worth the paper it’s been made up on.

What's the big deal here?  I do this all the time. I have a presentation booklet for "Sample Customer" made up using real statements and a real portfolio, with the personal information blacked out of course. It includes the Morningstar reports of each asset and lots of other nifty and impressive charts and graphs, stock intersection report etc etc.

It shows the prospect what type of reports and analysis of their accounts that they can expect when they become clients.   This was approved my my compliance department.  I update it every quarter.

I don't see the problem.  If we show a hypothetical illustration based on historical performances of a selected group of funds (with or without a load). You probably run these all the time.  How is this better than showing them an actual statement of a selection of mutual funds either within an annuity (with all charges factored in) or a portfolio statement?

As long as you still do the "past performance is no predictor, yada yada yada...." disclosures with the statements or with the reports based on actual accounts, don't you think it would be the same.

"Look at this hypothetical example Mr Client.  If we had been in these funds/annuity during period XX in these allocations XX this would have been the performance.  In fact many of my clients were allocated this way during the last market down turn. Of course past performance  blah blah blah blah" 

What is wrong with this?

Do you promise to make portfolio changes in the prospect’s account when

you make the change in the hypo? If so, that strikes me as a logistics

nightmare, and if not, it seems deceptive.

 I don't understand your question.  Do you not use hypothetical illustrations? Is it your idea that I should go and change every client's allocation when I run a new hypothetical illustration of historical performance? 

I promise to meet face to face with my clients at least 3 times a year for indepth portfolio reviews and contact them by phone if/when anything might need our immediate attention. 

What does that have to do with running a historical hypothetical illustration?

You mentioned that you update your hypo each month. How does that jibe

with the prospect/client that you pitched a different portfolio last month? By

the end of the year your hypo won’t look anything like last year’s prospect.



And for the record, no. I don’t use hypotheticals.

[quote=Philo Kvetch]You mentioned that you update your hypo each month. How does that jibe
with the prospect/client that you pitched a different portfolio last month? By
the end of the year your hypo won't look anything like last year's prospect.

And for the record, no. I don't use hypotheticals.[/quote]

Better check your reading comprehension.

I have a presentation booklet for "Sample Customer" made up using real statements and a real portfolio, with the personal information blacked out of course. It includes the Morningstar reports of each asset and lots of other nifty and impressive charts and graphs, stock intersection report etc etc.

It shows the prospect what type of reports and analysis of their accounts that they can expect when they become clients.   This was approved my my compliance department.  I update it every quarter

Nothing wrong with not using hypotheticals of historical returns of a mix of mutual funds if you don't want to.  I assume you also don't reference the 1-3-5-10 year returns on the investments that you are proposing?   How do you market investment products?

[quote=Indyone]

Thus far, I’ve got about 4 mil in L share VAs, which means $40K in trails and proper incentive to continue servicing these accounts…I’m glad you’re seeing the light…

Hey, Joeda, your box is full again so I can't answer your question...

Not every month. Every quarter. Sorry, my mistake.



Look, I’m not being confrontational. But follow me on this:



First of all, we’re ALL one correction away from an arbitration. Agreed?

Good. Now picture this.



Client’s Attorney- Now Ms Bunny, did you show my client this

hypothetical, which was compliance approved, of course?



DB-Why yes I did.



Atty-Is it the same today as it was nine months ago when you showed it

to my client?



DB-Well, no, I update it every quarter



Atty-I see. Did you make my client aware of the changes to your

recommendations when you made them?



DB-No, I didn’t.



Atty-And why not, Ms Bunny?



DB-Well, it wasn’t necessary.



Atty-I see Ms. Bunny…you have my client’s money so there’s no further

need to concern yourself with the cilent’s well-being.



And so forth, and so on. You get the idea.



In answer to your question, I very rarely use mutual funds, so hypos, at

least for me, are a non-issue.

I promise to meet face to face with my clients at least 3 times a year for indepth portfolio reviews and contact

Dust Bunny, I hope that your clients are all high networth and are all in fee-based accounts. 

[quote=Philo Kvetch]
In answer to your question, I very rarely use mutual funds, so hypos, at

least for me, are a non-issue.[/quote]



I don’t even use hypo’s. I tell people that past performance isn’t very
useful except for getting a flawed sense of potential future returns. I
tell clients the parable of the Turkey.

[quote]Every day the turkey gets fed a handful of grain by the farmer.
Some days he gets a little more and some days a little less, but in
general as he grew bigger he got more grain each day. He was a very fat
and happy turkey, content with life. Then came November 24th. [/quote]



So don’t read too much into past performance as it can tell you very little about the future, sometimes.



The best we can do is to say that in the past equity returns have been
X +/- s, bond returns have been X +/- s, other assets have been X +/- s
etc. And when combined into a diversified portfolio, the total risk
goes down.



As for dividends, they are when as and if declared, while interest payments are a little more deterministic

You actually tell that turkey nonsense to people? And they don’t look

disgusted and walk out?



Obviously your demographic extremely unsophisticated.

[quote=Dust Bunny]

 I don't understand your question.  Do you not use hypothetical illustrations? Is it your idea that I should go and change every client's allocation when I run a new hypothetical illustration of historical performance? 

I promise to meet face to face with my clients at least 3 times a year for indepth portfolio reviews and contact them by phone if/when anything might need our immediate attention. 

What does that have to do with running a historical hypothetical illustration?

[/quote]

That's the nice thing about finding something that works really well and not changing anything....Instead of using hypos, I can show actual client statements.

[quote=AllREIT] [quote=Philo Kvetch]
In answer to your question, I very rarely use mutual funds, so hypos, at
least for me, are a non-issue.[/quote]

I don't even use hypo's. I tell people that past performance isn't very useful except for getting a flawed sense of potential future returns. I tell clients the parable of the Turkey.

[quote]Every day the turkey gets fed a handful of grain by the farmer. Some days he gets a little more and some days a little less, but in general as he grew bigger he got more grain each day. He was a very fat and happy turkey, content with life. Then came November 24th. [/quote]

So don't read too much into past performance as it can tell you very little about the future, sometimes.

The best we can do is to say that in the past equity returns have been X +/- s, bond returns have been X +/- s, other assets have been X +/- s etc. And when combined into a diversified portfolio, the total risk goes down.

As for dividends, they are when as and if declared, while interest payments are a little more deterministic


[/quote]

Does your narrow mind really not get it? Your little theory is not relevant. Clients get bored when you explain that technical sh*t. They don't care. If you show a client two sets of returns, they will choose the higher one, every time. Do you think I'm bullsh*tting about closing deals by showing statements? THAT is the information that they want in order to make a decision.

I suggest you take a course in human nature. Clearly it's beyond your limited comprehension. Plus, you're an a$$hole.

[quote=anonymous]

I promise to meet face to face with my clients at least 3 times a year for indepth portfolio reviews and contact

Dust Bunny, I hope that your clients are all high networth and are all in fee-based accounts. 

[/quote]

All high net worth, yes.  My average account size is in the high 6 figures to low 7 figures.  Even though I promise to meet with my clients that often, most of the time they don't want to come in or are traveling and we do phone conferences.   In fact, half the time I have to literally force them to do so because they say everything is just fine. 

I'm switching some to fee based when I get the 65 at the end of June. Some will be part commission and fee based and some lols (little ole ladies with bond portfolios only) will probably still be comission.  At least that's how I see my business transitioning.

[quote=AllREIT]
I don't even use hypo's. I tell people that past performance isn't very useful except for getting a flawed sense of potential future returns. I tell clients the parable of the Turkey.
[/quote]

You've GOT to be kidding right?  You're not really this stupid.  This explains why it's so easy to ACAT accounts away from other brokers.  So I suppose that comparing the performance of a mutual fund to the S&P 500 with emphasis on the standard deviation isn't useful to you either?  Do you pick funds by throwing darts?

[quote=Philo Kvetch]Not every month. Every quarter. Sorry, my mistake.

Look, I'm not being confrontational. But follow me on this:

First of all, we're ALL one correction away from an arbitration. Agreed?
Good. Now picture this.

Client's Attorney- Now Ms Bunny, did you show my client this
hypothetical, which was compliance approved, of course?

DB-Why yes I did.

Atty-Is it the same today as it was nine months ago when you showed it
to my client?

DB-Well, no, I update it every quarter

Atty-I see. Did you make my client aware of the changes to your
recommendations when you made them?

DB-No, I didn't.

Atty-And why not, Ms Bunny?

DB-Well, it wasn't necessary.

Atty-I see Ms. Bunny...you have my client's money so there's no further
need to concern yourself with the cilent's well-being.

And so forth, and so on. You get the idea.

In answer to your question, I very rarely use mutual funds, so hypos, at
least for me, are a non-issue.[/quote]

Wow, you do have a real reading comprehension problem!! I hope you listen to your clients better than you read.  Where did I say that the package was anything to do with any recommendations that I would make in a client's account or that I make blanket recomendations to my clients based on hypos.  

Let me type sloooowwwwly.   It is a pre approach packet to show to prospects, using a real account (one of my 7 figure ones) that shows real statements with the accompanying analysis pages so the prospect can get an idea of how I analyize and review their accounts.  If the packet also happens to show perfformance that is incidental.  The reason I update it is because who would trust me if I showed them a portfolio snapshot and analysis from last year?

Your contention that you can't or shouldn't show a client or prospect a historical statement or hypothetical is just ridiculous.  As long as you aren't selling based on guaranteeing previous performance as future performance you are perfectly able to bring up the past performance.  In fact you should do so, in order to make references to how an investment might be affected by current conditions compared to those in the past.

Would you go to a car dealer and buy a car where the salesman won't give you any information about gas mileage performance, repair and break down statistics, warranties, options availble.  He just says buy this.....trust me.....I'm a professional car salesman so I know best.    I sure wouldn't.

[quote=Dust Bunny][quote=anonymous]

I promise to meet face to face with my clients at least 3 times a year for indepth portfolio reviews and contact

Dust Bunny, I hope that your clients are all high networth and are all in fee-based accounts. 

[/quote]

All high net worth, yes.  My average account size is in the high 6 figures to low 7 figures.  Even though I promise to meet with my clients that often, most of the time they don't want to come in or are traveling and we do phone conferences.   In fact, half the time I have to literally force them to do so because they say everything is just fine. 

I'm switching some to fee based when I get the 65 at the end of June. Some will be part commission and fee based and some lols (little ole ladies with bond portfolios only) will probably still be comission.  At least that's how I see my business transitioning.

[/quote]

An average is one number, not a range of numbers.

It's a moving average

It’s a moving average

I'm not lying.  I've been in the business for 18 years and will probably be retiring in about 5.  Many of my clients have been with me for that length of time and have multiple accounts within the same household as well as corporate and retirement plans. I don't sell performance.(although my performance over the years has been pretty good). I sell service which is what the packet is all about.    I also don't prospect very much because I don't need to. My clients refer to their families and friends to me and my husband hand-grooms his clients from his separate business. I have enough clients to more than keep me busy. 

I am getting the series 65 to be able to have a more attractive business with fee based income, to sell when the time comes to transition to retirement, as well as the fact that some of my clients have stated a desire to do some fee based account trading.

Don't take my advice if you don't want to, (I don't care), but realize that every one's business is different at different stages of their lives and length in business as well as the demographics of their areas.

Moving average is a joke with Bobby. You do know what a moving average is? 

[quote=Reggin][quote=AllREIT]I don’t even use hypo’s. I tell people
that past performance isn’t very useful except for getting a flawed
sense of potential future returns. I tell clients the parable of the
Turkey. [/quote]

You've GOT to be kidding right?  You're not really this stupid.  This explains why it's so easy to ACAT accounts away from other brokers.

  So I suppose that comparing the performance of a mutual fund to the S&P 500 with emphasis on the standard deviation isn't useful to you either?  Do you pick funds by throwing darts?

Great post, Allreit.

I suggest you take a course in human nature. Clearly it's beyond your limited comprehension. Plus, you're an a$$hole.

Bobby, little dick, big mouth.

[quote=crashcourse]

Great post, Allreit.

I suggest you take a course in human nature. Clearly it's beyond your limited comprehension. Plus, you're an a$$hole.

Bobby, little dick, big mouth.

[/quote]

Wow!  I'm really starting to like this dude.

[quote=Dust Bunny]

I’m not lying. I’ve been in the business for 18

years and will probably be retiring in about 5. Many of my clients have

been with me for that length of time and have multiple accounts within

the same household as well as corporate and retirement plans. I don’t sell

performance.(although my performance over the years has been pretty

good). I sell service which is what the packet is all about. I also don’t

prospect very much because I don’t need to. My clients refer to their

families and friends to me and my husband hand-grooms his clients from

his separate business. I have enough clients to more than keep me

busy.

I am getting the series 65 to be able to have a more attractive business

with fee based income, to sell when the time comes to transition to

retirement, as well as the fact that some of my clients have stated a desire

to do some fee based account trading.

Don’t take my advice if you don’t want to, (I don’t care), but realize that

every one’s business is different at different stages of their lives and

length in business as well as the demographics of their areas.

Moving average is a joke with Bobby. You do know what a moving

average is?

Personally, I've chosen to not be a mutual fund hack.

With all due respect.......(which generally means really with none) you don't have a clue.  STFU

[quote=Dust Bunny]

Personally, I've chosen to not be a mutual fund hack.

With all due respect.......(which generally means really with none) you don't have a clue.  STFU

[/quote]

LOL...Judging by what you've posted, I've already forgotten more about this business than you'll ever know.

So 'long, hack.  See you in the funny papers.

A major broker dealer's internal study shows that the majority of advisor managed wrap accounts - using managed mutual funds - these accounts underperform their indexes. The performance, wrap fee, account activity level, apparent financial advice being given ( or not) on the accounts, all of this is of interest to regulators, and could represent a potential compliance or regulatory or class action lawsuit lightening rod. The fee has to be justified.

We all know the facts about the performance of managed funds vs. indexes. We also know that in the managed fund world, winners - index beaters - tend to run, and losers tend to run.

Index or managed, the question comes back to one of value received for compensation paid by the client. Those advisors who take the trouble to sharpen financial planning skills and deliver value ( and document service and advice), serve the best interst of the client, and work for the long term, these advisors appear to be on firm ground.

Philo, Bunny…whoa…you are both fine advisors in my book…different approaches, but fine advisors.  Can’t you just agree that there are different ways to skin the cat and lay down your swords?

[quote=crashcourse]

A major broker dealer's internal study shows that the majority of advisor managed wrap accounts - using managed mutual funds - these accounts underperform their indexes. The performance, wrap fee, account activity level, apparent financial advice being given ( or not) on the accounts, all of this is of interest to regulators, and could represent a potential compliance or regulatory or class action lawsuit lightening rod. The fee has to be justified.[/quote]

when referencing studies, it lends credibility to actually provide the name and authors of said study, IMO.

I know that my wraps using managed open-end mutual funds have consistently beat their i-share counterparts (both in lower std dev. and much higher returns). 

So how does the advisor justify using a wrap, with a 1% fee, and investing in all etf's or index funds?  Do they disclose to the client that they have just guaranteed index underperformance?

[QUOTE]

So how does the advisor justify using a wrap, with a 1% fee, and investing in all etf's or index funds?  Do they disclose to the client that they have just guaranteed index underperformance?

[/quote]

How does an advisor charge a commission to just hand the money over to someone else?

Next up! Get your mutual funds here...

[quote=EDJ to RIA]

[QUOTE]

So how does the advisor justify using a wrap, with a 1% fee, and investing in all etf's or index funds?  Do they disclose to the client that they have just guaranteed index underperformance?

[/quote]

How does an advisor charge a commission to just hand the money over to someone else?

Next up! Get your mutual funds here...

[/quote]

Has anyone noticed that fee advisors HATE commission advisors, but the commission guys could care less? Personally, the broker meter is one of the best things to happen to my business. I wish more people would use that compensation model. "The first thing we're gonna do is turn off those EXTRA fees."