Financial Planning & Regulatory Assets Under Management

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As the financial services industry continues to evolve, so, too, does the distinction between “investment management” and “financial planning” as discreet but complementary services that a registered investment adviser can provide to clients. I’d read two of Michael Kitces’ recent posts for a more fulsome discussion of an “investment-centric” versus a “financial-planning-centric” firm culture (here and here), but suffice to say it is not a distinction without a difference. The former focuses on managing or recommending a portfolio of securities on behalf of a client, and the latter focuses on life decisions that have some sort of financial impact (managing […]

Four Useful Hacks for the SEC’s IAPD Disclosure Site

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It’s been said that the eyes are the window to a person’s soul, but I’d argue that a person’s internet browsing history is also pretty telling. It can reveal a lot, and in my case it revealed that I am a complete and incorrigible fanboy of the laws, rules and regulations that smother surround the financial services industry – particularly the Securities and Exchange Commission’s disclosure regime. More specifically, my history reveals repeated visits to the SEC’s Investment Adviser Public Disclosure website, or IAPD, at www.adviserinfo.sec.gov. Congress required that the SEC establish “a readily accessible electronic process to respond to […]

Maintaining Attorney-Client Privilege During a Mock Exam

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The principle of attorney-client confidentiality is sacrosanct. In California, for example, an attorney may only reveal a client’s confidential information to the extent the attorney “reasonably believes the disclosure is necessary to prevent a criminal act that the [attorney] reasonably believes is likely to result in death or substantial bodily harm.” This is a narrow exception with a lot of conditions: the information must be reasonably believed by the attorney, the disclosure must be necessary, the threatening act must becriminal, and be likely to result in death or substantial bodily harm. If even one condition isn’t met, the attorney is […]

FINRA Peeks Behind the Algorithm’s Curtain

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On the heels of the Financial Industry Regulatory Authority issuing a Report on Digital Investment Advice last month, on April 7 the Securities and Exchange Commission approved a FINRA rule amendment that requires registration of persons that are “primarily responsible for the design, development or significant modification of algorithmic trading strategies, or who are responsible for the day-to-day supervision or direction of such activities.” The fundamental proposition is that all algorithms are conceived and built by humans, and said humans should be both qualified and readily identifiable so they may be held accountable for any harm their creations cause. The […]

A Less Controversial, but Just as Important, Fiduciary Duty

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This year will go down in history as the year of the great fiduciary wars: advisors v. brokers, DOL v. SEC, Senator Elizabeth Warren v. the entire financial services industry…the list could go on. Tensions have flared and much ink has been shed. When the dust and rhetoric settles, the highest casualties will likely be suffered by the investing public and their confidence in our industry and government representatives. But alas, I digress. I’m here today not to wax poetic about the fiduciary duty owed by advisors to their clients, but instead to offer some insight into a less controversial […]

Beyond Mandatory Arbitration: 4 Options for Advisor-Client Dispute Resolution

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Mandatory pre-dispute arbitration clauses in advisory contracts are all the rage… and I mean that both literally and figuratively. It has become both a popular dispute resolution mechanism between advisors and their clients, and at the same time has enraged critics the likes of which include a cadre of House and Senate members led by Senator Stuart Smalley of Minnesota. I’m paraphrasing, but Senator Smalley thinks mandatory arbitration clauses in advisory contracts are “stinkin’ thinkin’”. Criticisms notwithstanding, the SEC has yet to act on its Dodd-Frank-given powers to restrict mandatory pre-dispute arbitration clauses pursuant to Section 205(f) of the Advisers […]

Review These Sections of Your Employment Agreement Before Breaking Away

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If you’re reading this article, my working assumption is that at some point in your life you’ve been employed by somebody other than yourself. Odds are you’re working for somebody else at this very moment, perhaps even plotting the day you jump ship and join a competitor or set out on your own. Or perhaps you’re on the other side of the credenza and want to protect your firm from employees that defect with more than their fern and their framed family picture in their take-home banker’s box on their last day. The point is that both employee and employer […]