[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…