The Department of Labor’s 401(k) plan fee disclosure rules that would require U.S. broker-dealers to report how much they are paid to distribute mutual funds through brokerage windows is going to create a nightmare.

Brokers claim that the hundreds of different compensation arrangements that firms will have to disclose are unworkable because of the different fee structures each of the thousands of mutual funds from hundreds of companies have.

The proposed rules are due to take effect on April 1 and require the plan providers to give employers figures for the direct and indirect compensation the broker-dealers receive to service the plans.

Clarification Needed

The Securities Industry and Financial Markets Association has asked for clarification about what they need to disclose and wants guidance on the form the disclosures should take, but a Labor Department spokesman supposedly declined to comment.

So right now, each broker-dealer is taking a different approach in its efforts to comply. Some firms are opting for a “phone book approach” to the disclosure while others are disclosing a “range of compensation” for each fund the firm offers.

Appears there will be more confusion to come.

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The new Merrill Edge Financial Advisors are targeted for Phoenix, Los Angeles, San Diego and Orange County and are to be on board by the end of the first quarter, 2012, bringing the total financial solutions advisor force in these areas to more than 250.

You may recall, the firm has been adding to their financial solutions advisor force to reach a goal of more than 1,000 by the end of this year. The firm also plans to fill regional manager slots in Phoenix, Arizona and the Inland Empire region in Southern California.

As finance recruiters with a focus and expertise in these areas, we see some great opportunity for those looking to make a move and encourage them to contact us immediately.

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While other banks are under pressure to cut their dividends, UBS surprised analysts and investors with their announcement that they would begin paying dividends again. (The last cash dividends were paid in 2006.)

The announcement came at an investor event in New York last Thursday when UBS said it would cut investment bank risk-weighted assets by almost half and shift focus back to its core business of managing the assets of the rich as it pared its profitability targets.

Promising to implement a progressive capital return program, UBS stated they will cut its investment bank staff of 18,000 to 16,500 by the end of 2013 and 16,000 by the end of 1016, with most job losses accounted for by attrition and restructuring.

However, analysts said this reduction was only “marginally more than what the bank had already targeted and that the bank had left itself leeway to make further cuts.”

According to Jon Peace, banking analyst at Nomura in London, “the subtext is that this is a conservative number and they can go further, but if they say they are going to decimate the investment bank it could significantly raise employee turnover and execution risk”. *

Well, they didn’t go as far as investors had hoped in trimming down their scandal-hit investment bank, but with the announcement of the dividends, their shares were up 1% the following day.*

*Reuters, Friday, Nov. 18, 2011 “UBS Shares Rise on pledge to Restart Dividends”, by
Emma Thomasson and Martin de Sa’Pinto

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Regions Financial Corp announced their intent to sell off their Morgan Keegan brokerage unit last June, and ever since rumors and speculations over who will acquire this close-knit brokerage whose roots date back to 1969 have been the talk on the street and inside Morgan Keegan.

Blackstone Group and Stifel Financial Corp have been cited as possible suitors for Morgan Keegan. Inside rumors  seem to be pointing to the majority of more than 1.200 brokers in the private client group are hoping for a private equity buyer which could give them an equity share in the firm and allow them to stay more client-centered than a big bank might allow.

So, if that does not happen, will there be a mass exodus?

Industry recruiters seem to agree that these financial advisors do not want to be a part of a large firm and if client dissatisfaction over the acquisition occurs also, then they would be looking to leave. And it very likely could be a mass exodus.

So, where would they go? They have always been extremely loyal; they like a small regional firm culture and they want to retain that identity. The independent space is a logical next-step it would seem.

Morgan Keegan spokeswoman, Kathy Ridley, has said “The Company is looking for a buyer who will maintain the same culture that we have had.” As Financial Recruiters, we will be watching with interest.

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Spend more to make more?  Usually a sound business practice and one which many top producing Financial Advisors are adhering to.

More and more, we financial advisor recruiters are finding “teams” versus individuals who may be looking to move.

Hiring a Team to Grow Your Business

A “full” team (all with their Series 7 license) can include the advisor, his business manager, a full-time sales assistant and a junior advisor.

So how do these three team members contribute to growing the advisor’s business?

1. Hiring someone to manage the business to improve contact management of clients, setting up regular emails and newsletters can improve an advisor’s efficiency.
2. A sales assistant can do a lot of the legwork of financial planning, as well as help out with prospective clients and referrals.
3. And finally, by hiring and training a junior advisor, smaller clients can be transitioned to him at the same time he begins building his own book.

All add up to relieving the advisor of routine matters that can be overly time consuming, thus allowing more time for prospecting and bringing in more clients.

Initially, there is time and energy spent, and a lot of advisors are hesitant to add staff, but the benefits can be huge. And they don’t all have to be hired at once.  Might consider starting with an intern – one you can “groom.”

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Now that the Dodd-Frank law has passed, the transition period is just beginning. Financial advisors with under $100 Million assets under management by July 2011 must transition their registration with the SEC to their state jurisdiction. However, during the transition, you could be subject to SEC and state examinations.

In order to assure a smooth transition, state regulators can and will examine any firms producing under $100 Million as they choose. The SEC will continue with its same examination process until the transition occurs. If any advisor has gone through an SEC examination, they know all too well the tedious process. It will be unfortunate for some firms to have to go through this process twice within eight months. The whole purpose for these changes was to offload work from the SEC.

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Read Bill Willis’ new article for OnWallStreet, The Treasure Within, set to publish on November 1, 2010.

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Although, high net worth clients say they are recovering their losses from recent years, they are still concerned about their financial future. After the recent election, investors feel the economy is looking brighter, but there is still cause for concern. There are many questions unanswered regarding regulations facing the financial securities industry that will affect most advisors.

A positive note is most clients are happy with their current financial advisors. They have managed to ride out the downturn with their advisors without jumping ship and are happier for it. This year, the rebounding of the financial markets has helped investors regain some of their losses.

Investors may still be conservative with purchases and investments, but they remain confident the economy will continue to rebound.

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Finding the best team of associates for your RIA firm takes work, but the benefits of a team versus a solo shop are substantial. That’s because RIA firms don’t have help from broker-dealers provided to them. Many advisors tend to have a special niche such as financial planners or investment oriented advisors that set them apart from the rest. You should look for an advisor whose niche complements yours. This will provide added value to your clients and they will appreciate it.

If you decide to start your own RIA firm, make sure you have a solid business plan. If you want to bring on a partner, make sure you discuss what specific job functions each with perform. A well thought out business plan will help prevent issues that could ultimately end your partnership. When there is a team set in place and everyone has a specific job function, your business will run smoother.

Having a team will also make it easier to transition clients to junior advisors when the senior financial advisors retire. Clients will be less likely to leave your firm if they still receive the same service they are accustomed to.

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Upscale wealth managers take on a much larger role for their clients. Many of these financial advisors focus not just on their finances, but also their family and much more. Advisors want to develop a deeper relationship with their clients partly as a retention strategy.

High net worth Clients want more than just a review of their investment performance. They have more complex financial issues such as real estate investments, estate planning, insurance, and added risk. These advisors now try to encompass their clients’ entire financial well-being down to what cars to buy and when. Clients enjoy having one firm that caters to all of their financial needs and are less likely to leave.

The added benefits advisors provide their clients will not only retain their existing clients, but attract new clients as well.

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