The Financial Industry Regulatory Authority (FINRA) announced last week that it has hired Michael Oxley, one of the authors of Sarbanes-Oxley regulation to lobby on its behalf to be the self regulatory organization to oversee the RIA business. This strategy is definitely representative of the broker-dealer SRO’s interest in ensuring it maintains a key position in regulating RIAs. One might also make the case that Finra is pulling out all the stops to ensure they have control over the fastest growing segment of the advice business, RIAs. As more and more advisors shift their business from commissions to fees, the greater the probability that they transition completely to the advice model, leaving behind broker-dealers and Finra regulation.
So, is this move by Finra self preservation or in the best interest of the industry? This remains to be seen, but if you’ve kept up with this topic at all, you understand (but may not agree with) that it is highly likely that more regulation and review will be coming to the RIA business model. Finra has developed the examination process for broker-dealers and some of this infrastructure and experience could be used to exam RIAs. The SEC has admitted it lacks the resources and with budget battles, is not likely to experience an increase in funding needed to properly oversee all RIAs. The state agencies overseeing RIAs are cash strapped as well, so there’s only a remote chance that they would be the sole oversight organizations. Don’t expect this to be resolved anytime soon. There’s lots of lobbying and debating yet to occur on Capital Hill and within the advisor community. Bottomline, there will be more oversight in the future. If you have a view about regulation, now is the time to offer it to your senators and congress before we end up with some like Sarbanes-Oxley for RIAs.
For a link to a recent Investment News article about this topic click here. More.
So, is this move by Finra self preservation or in the best interest of the industry? This remains to be seen, but if you’ve kept up with this topic at all, you understand (but may not agree with) that it is highly likely that more regulation and review will be coming to the RIA business model. Finra has developed the examination process for broker-dealers and some of this infrastructure and experience could be used to exam RIAs. The SEC has admitted it lacks the resources and with budget battles, is not likely to experience an increase in funding needed to properly oversee all RIAs. The state agencies overseeing RIAs are cash strapped as well, so there’s only a remote chance that they would be the sole oversight organizations. Don’t expect this to be resolved anytime soon. There’s lots of lobbying and debating yet to occur on Capital Hill and within the advisor community. Bottomline, there will be more oversight in the future. If you have a view about regulation, now is the time to offer it to your senators and congress before we end up with some like Sarbanes-Oxley for RIAs.
For a link to a recent Investment News article about this topic click here. More.
Are IBD Reps the Next Wave for RIA Model?
January 24th, 2011 A recent article in RIABiz.com predicts that advisors moving to the RIA model will be coming in greater numbers from independent broker-dealers. The sources point to the fact that many advisors are reaching the magical $100 million of assets under management that many times creates the urge to make the switch to more capabilities and the opportunity for greater control as a business owner and advisor.
Others mentioned that that advisors are seeking more complete wealth management solutions such as CRM, portfolio management and financial planning, and the freedom to truly operate in the best interests of their clients.
Schwab provided stats that indicate their new relationships with advisors from IBDs were up over 45% in 2010.
For more information or to read the full article, see link below.
http://www.riabiz.com/a/5391326
Schwab provided stats that indicate their new relationships with advisors from IBDs were up over 45% in 2010.
For more information or to read the full article, see link below.
http://www.riabiz.com/a/5391326
RIA Administrivia
January 5th, 2011 How to Move from Administrivia to Improved Productivity and Enhanced Lifestyle
Small to mid size registered investment advisors encounter many of the same challenges that other individual fee based advisors experience trying to operate an efficient practice while managing a growing and increasingly complicated business model. Whether it’s staffing demands, increased regulation, dealing with the need to upgrade or integrate technology, or just plain not having an organized and systematic approach to their business, RIAs can quickly become burdened with excessive administrivia. Ironically, the success advisors have attained with their clients invariably results in a growing need for breadth and capacity that is typically difficult to muster up in a small business. Moreover, advisors often times become distracted in their attempts to solve for these issues at the expense of their client relationships and service.
Firms that are most affected with the administrivia affliction tend to be solo practitioners or smaller RIAs, but it’s becoming increasingly common for larger firms to seek outsource solutions to mitigate the operational, compliance, technology and even investment management challenges that are part of operating an RIA.
As a result of many conversations with principals of RIAs experiencing administration overload, Dynamic Wealth Advisors created RIA services that help firms to help them refocus their efforts on their clients and developing their business. Among the services offered by DWA are:
Small to mid size registered investment advisors encounter many of the same challenges that other individual fee based advisors experience trying to operate an efficient practice while managing a growing and increasingly complicated business model. Whether it’s staffing demands, increased regulation, dealing with the need to upgrade or integrate technology, or just plain not having an organized and systematic approach to their business, RIAs can quickly become burdened with excessive administrivia. Ironically, the success advisors have attained with their clients invariably results in a growing need for breadth and capacity that is typically difficult to muster up in a small business. Moreover, advisors often times become distracted in their attempts to solve for these issues at the expense of their client relationships and service.
Firms that are most affected with the administrivia affliction tend to be solo practitioners or smaller RIAs, but it’s becoming increasingly common for larger firms to seek outsource solutions to mitigate the operational, compliance, technology and even investment management challenges that are part of operating an RIA.
As a result of many conversations with principals of RIAs experiencing administration overload, Dynamic Wealth Advisors created RIA services that help firms to help them refocus their efforts on their clients and developing their business. Among the services offered by DWA are:
- Access to DWA’s wealth management platform with unified CRM, portfolio management and financial planning solutions, email, electronic workflow, document management and storage.
- Account services including processing applications with custodians, trust companies and other investment management companies
- Account billing, fee payment, and performance reporting
- Data aggregation and reconciliation
- Custodian management services that enable the firm to access custody with major institutional asset custodians with preferential services and pricing
- Access to institutional investment management solutions including asset allocation models
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