Archive for the ‘Compliance’ Category
I had created this list many years ago as a guide to help me conduct the necessary due diligence on brokerage firms. I’ve updated it for today’s climate but it is by no means all-inclusive.
Is the firm owned by another company? If so, there will always be the temptation to pressure you to sell certain products that benefit the parent company’s bottom line.
The compliance record of any broker dealer can be found at www.finra.org. Pay attention to the number of infractions as well as the dollar amount of any fines. Be sure the firm is registered in all 50 states. If you are a Series 6 Rep, ask if they will accept targeted licenses such as Series 22, 52, 62 and 72.
FINRA prohibits “parking” a license, so every Registered Representative must have a profitable, viable business. But beware of a production quota, which could be a sign that the firm will intrude on your business plan when they see fit.
A number of broker dealers have gone out of business in the past year or are threatened by bankruptcy. Look at the financial statements as well as the products sold by the firm.
Payout is important, but so are miscellaneous charges that may be assessed to you. Ticket charges, technology fees, audit fees and account fees all impact your revenue.
You should be the “Rep of Record” on your accounts and you’ll want the freedom to transfer your accounts to another brokerage firm if necessary. Look at the broker dealer’s privacy policy to see how confidential information is handled.
The trend is away from commissions and toward fee-based accounts. This can be valuable to the client and result in much higher valuations when you sell your business.
Broker dealers will limit the types of products available based on several factors, including the sophistication of their advisors. Be sure alternative products are available and that there are no proprietary products (to avoid a conflict of interest).
Does the firm attract product salespeople or advisors? Divide gross revenue by number of Reps to find average production. Look at magazine surveys for additional information.
Technology should help you do your job more efficiently. Does the firm require you to use specific financial planning software or other program? Is forms population available?
Tags: business, Compliance, independence
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On March 22, 2010, the Senate Banking Committee (Committee) approved the Restoring American Financial Stability Act of 2010 (RAFSA), S-3217, by a party-line vote of 13 to 10. I am pleased to report that the bill passed by the Committee contains a provision directing the Securities and Exchange Commission (SEC) to study all the issues surrounding harmonization of broker-dealer and investment adviser oversight. We supported the inclusion of this study in RAFSA because it will provide the SEC, investor advocates, financial services industry professionals, and other stakeholders with an opportunity to shape these important regulatory reforms without a rush to judgment in a politically charged atmosphere. We support the creation of a new universal standard of care and an industry-funded self-regulatory organization for investment advisers. We believe the study represents the best available opportunity to achieve our goals.
On April 12, 2010, the Financial Services Institute submitted a letter to all Senators urging them to support the SEC study in the final version of RAFSA. RAFSA is expected to make its way to the Senate floor in the next couple of weeks.
Many of you have responded to our Calls to Action by letting your Senator know how you feel about important aspects of this legislation. We are grateful for your support and involvement in the process. It does make a difference!
Tags: business, independence, regulation
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On Monday, March 22, 2010, the Senate Banking Committee (Committee) approved the Restoring American Financial Stability Act of 2010 (RAFSA) by a party-line vote of 13 to 10. I am pleased to report that the bill passed by the Committee contains a provision directing the Securities and Exchange Commission (SEC) to study all the issues surrounding harmonization of broker-dealer and investment adviser oversight.
As mentioned in my March 15 blog, I supported the inclusion of this study in the RAFSA because it will provide the SEC, investor advocates, financial services industry professionals, and other stakeholders with the opportunity to shape these important regulatory reforms without a rush to judgment in a politically charged atmosphere. From the start of this important debate, we have embraced regulatory reforms that support universal access to competent investment advice, clear and concise client disclosures, and uniform and effective regulatory supervision of all market participants. We still support the creation of a new universal standard of care and an industry-funded self-regulatory organization for investment advisers. We believe the study represents the best available opportunity to achieve our goals. I will continue to monitor RAFSA as it makes it way to the Senate floor in the next few months.
Many of you responded by letting your Senators know how you feel about important aspects of this legislation. We are grateful for your support and involvement in the process. It does make a difference.
Tags: business, Compliance, independence
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A growing number of Senate Banking Committee members are indicating their support of a provision that would replace the regulatory reform draft legislation’s requirement that all financial advisors become registered investment advisers with an amendment that would direct the SEC to study all the issues surrounding harmonization of Broker/Dealer and investment adviser oversight.
I support the adoption of the study because it will provide an opportunity to shape regulatory reforms in a manner that is workable for all client situations and across all business models. Furthermore, I continue to support the creation of a new universal standard of care and an industry-funded self-regulatory organization for investment advisers. I believe the proposed study represents the best available opportunity to achieve these goals.
I urge you to call or write your Senator in support of an SEC study of these important issues. The Financial Services Institute provides a link that can help you quickly contact your Senator through the FSI Advocacy Action Center: http://www.bipac.net/issue_alert.asp?g=FSI&issue=Senate_Banking_Committee_Study&parent=FSI
I have personally contacted my Senators and asked them to support this study. I urge you to join me so we can maximize our impact.
Tags: business, Compliance, independence
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The Commonwealth of Massachusetts passed final regulations concerning the protection of its residents’ personal information. The regulations outline minimum standards that must be met with regard to the protection and maintenance of paper and electronic records that contain personal information. To view the rule in its entirety, please click on the following link:
www.mass.gov/Eoca/docs/idtheft/201CMR1700reg.pdf
The regulations apply to “all persons that own or license personal information about a resident of Massachusetts.” This means that any person or business that collects personal information in the course of their business and has customers or employees who are residents of Massachusetts must comply. It does not matter if you or your business is not actually located in Massachusetts.
Massachusetts considers personal information to be a resident’s first and last name or first initial and last name in combination with one of the following: Social Security number; driver’s license or state-issued ID number; financial account number; or credit or debit card number.
The deadline for compliance is March 1, 2010.
If you determine that the rule does apply to you, there are a few steps that you should take. First, read the regulations. It is important for anyone these rules affect to fully understand their scope and requirements. Second, identify the types of personal information that you or your business collects and maintains. The typical Rep/Advisor has multiple pieces of client information that must be protected. Third, develop and maintain a comprehensive written information security program. This program is required by the rules and must cover various items. Finally, implement necessary computer security requirements. As part of your written security program, you will need to maintain certain minimum standards of protection for electronic records.
Tags: business, Compliance
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