[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.