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Jan 19, 2006 4:05 am

Although the bank I’m at doesn’t have proprietary funds I must sell, it
does have a “favored” fund list. We use the NFS platform, therefore
theoratically have access to dozens upon dozens of fund families. The
company has- in their infinite wisdom decided to allow only five fund
families to be sold. Of those five fund families, we can offer only
about half of the funds from each fund family. When I transferred my
book from my previous firm, all of my various funds came over. I know
for a fact the bank has selling agreements in place with other fund
families that we can’t currently sell. I know this is unethical on
their part. By the way, we offer several different Variable Annuities
and can invest our clients in any fund or fund family within those
VA’s. When I prodded my district manager, he let slide that the bank
didn’t want to “dilute” their business that they send to the current
"favored five". They must be getting some good kickbacks… My question
is- is this legal for them to restrict our sales? If not, what can I do
about it? And please- no recruiting pitches from the Indies- thank you.

Jan 19, 2006 4:19 am

Man, I'm trying really hard to find something to help you, but can't.  You are handcuffed and there is only one way out.  I'm not a recruiter for an INDY-I promise-.  You have to ask yourself why you are there and is it worth it if I don't feel comfortable about what I'm doing.

Really I am not trying to sound mean but you should try someplace else.  Maybe there is another bank that you could move to that has more options open for you.

Jan 19, 2006 6:11 am

Sounds like Jones without the door knocking....

Jan 19, 2006 6:32 am

You are a captive agent and I would love to know which bank you work for. 

I just called a freind of mine in ATL that works at Wachovia.  She said depending on what level of "advisor" you are depends on what you can present to clients.  Only the fully licensed people can present everything.  She knew of no restrictions, however, on which MF's could be sold.  Funny thing is that she can open up a T IRA for anyone who walks in the bank.  The IRA could only hold Cd's this bothers the ... out of me.  If you aren't licensed it shouldn't even be possible.  I'm always able to take clients from banks.  I don't understand why they shortchange their clients that way.

Jan 19, 2006 1:22 pm

I  am considered a “Senior” Advisor and I have my 7, 63/65, Life & Health.

Jan 19, 2006 2:14 pm

I would discuss it with my manager.  I would get some clarity on why you can only sell 5 funds.  Are these A shares only?  Can a client buy shares of another fund family if they bring on a certain amount of money?

Jan 19, 2006 2:52 pm

A, B, or C… Doesn’t matter. It just needs to be on this list. The
district manager becomes quite annoyed when I try to request other fund
families. He says “I should sell what we have and stop complaining”. He
also refers to some other FA’s who are selling the hell out of the
funds on the list. They are either dumb, or have no ethics- which I see
rampantly here. In the existing client files, I have come across 200K+
“B” share sales as recently as 2004 by the previous FA. I’ve also seen
numerous customers who were sold a money market (fixed account) in a
VA!!!  He went on to say on more than one occasion that "people
only complain about not having enough to sell when they can’t sell. Too
bad he is so shortsighted that if I was able to offer a more complete
array of investments, I would be more confident about doing the right
thing for the customer. He claims what we have is fine, bacause nobody
can guarantee that if I invested a customer in another fund that it
would do better. In other words “past performance is no guarantee of
future performance”. Technically he is correct with that argument,
however- when selecting mutual funds, what else to we have to go by?
Past performance- a track record. A Morningstar or Lipper Rating…

Jan 19, 2006 3:24 pm

TB - any chance you care to name the bank?  Not to pick on other firms but there have been past fines obviously for directed business due to certain "kickbacks" arranged between parties.  Is this disclosed to clients?  Have you asked what the financial incentive is to the bank for such a select list or how they came to decide these are the families they're going with?

Sounds like you may be on your way to a whistle blower situation.  I don't envy your situation.

Jan 20, 2006 4:37 am

What funds or fund families are you using?  Just curious.

As for your issue... we'll... it sounds like your boss is a creep who is drinking the company Kool-Aid.  I'd blow that whistle hard and move on.  You'll do their cients a huge favor.

If you don't want to go indy, then checkout Morgan Stanley.  They got a good recruiting package now and will respect your integrity.

Jan 20, 2006 2:11 pm

I can transfer in just about any mutual fund. And no, there is no
"pressure" to liquidate those funds… And they can skate around the
"suitability" issue because the five fund families have on their
"favored" list balanced, large/ mid/ small cap. Sprinkle in some other
assorted bond funds (no international bonds, no natural resources,
limited international stock, 1 REIT, 1 crappy senior floating rate).
You get the picture… They can claim they have a “variety” of funds. A
few are very good. Most are mediocre. Several are crap! They wont give
us a reason why these funds are on the “list”. Should I send an E-Mail
to my manager asking (on behalf of a client’s request) if the firn
receives extra payment from these five “favored” funds? Shouldn’t they
be telling us their logic or reason for having certain funds on a
limited list for us to sell? Especially if we can sell WAY more funds
and fund families if we do it through on of the Variable Annuities… It
is so hypocratical!!

Jan 21, 2006 12:23 am

Find a new place to work.  Revenue sharing must be disclosed it is usually on their website.

Have your boss sign something saying you can use only five families.  Bring up your concerns, document them and if your concerns are not addressed you have to either leave or call for help, organize and rebel.