fee based trading account

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aldo63's picture
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what is going on with this? my firm says there is no problem and fee based stock accounts.  i  also heard my old company , morgan stanley , is not going to open new ones and will close the existing choice account in 120 days? i also heard that they are going to stop the online trading portion of the account. I guess i really have not followed this "merrill rule" very closely.
any thoughs?

AllREIT's picture
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aldo63 wrote:what is going on with this? my firm says there is no
problem and fee based stock accounts.  i  also heard my old
company , morgan stanley , is not going to open new ones and will close
the existing choice account in 120 days? i also heard that they are
going to stop the online trading portion of the account. I guess i
really have not followed this "merrill rule" very closely.
any thoughs?

Probably a split system where people pay for both trades and quarterly maintenance fee.

The firms will do anything to avoid being RIA's since that opens up a big can of worms.

troll's picture
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aldo63 wrote:
  i  also heard my old company , morgan stanley , is not going to open new ones and will close the existing choice account in 120 days? i also heard that they are going to stop the online trading portion of the account. I guess i really have not followed this "merrill rule" very closely.
any thoughs?

 
Your info about MS is incorrect.

troll's picture
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AllREIT wrote: The firms will do anything to avoid being RIA's since that opens up a big can of worms.
 
The firms are ALREADY RIAs in other sorts of accounts. The issue is how to incorporate that process into what would otherwise be a traditional brokerage account.

troll's picture
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aldo63 wrote:
what is going on with this? my firm says there is no problem and fee based stock accounts.  
 
Actually, depending on the final touches from the SEC there are "problems" with the construction of the older fee in lieu of commission accounts. I have no doubt that behind the scenes your firm is scrambling to anticipate where the SEC is going and what changes they'll have to make to meet the SEC.

troll's picture
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The more I hear about this crap, the more I love selling annuities.

AllREIT's picture
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mikebutler222 wrote:

AllREIT wrote: The firms will do anything to avoid being RIA's since that opens up a big can of worms.

The firms are ALREADY RIAs in other sorts of accounts. The issue is how
to incorporate that process into what would otherwise be a traditional
brokerage account.

Mike, the deal is that brokers are acting as IAR's representing RIA's
who run the SMA's towards clients. They are not acting as RIA's
themselves.

As a Registered Rep, you are an employee of "the firm" with a duty to
act in the best interests of the firm at all times, subject to the
limitations of NASD wrt to not harming clients. This is where the
merrill lynch rule came from.

Right now its unclear how the SEC will resolve this. Because if it
turns out that going forwards brokers have a positive duty to act in
the best interests of clients, you are going to see some big changes in
the industry.

anonymous's picture
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"As a Registered Rep, you are an employee of "the firm" with a duty to act in the best interests of the firm at all times, subject to the limitations of NASD wrt to not harming clients."
This is not an accurate statement.  Not all RR's are employees of their firm.  I'm not an employee of my B/D.  Secondly, we have no duty to act in the best interest of the firm.  Rather, we simply have to make sure that the investments are "suitable".  ex. Two mutual funds are suitable for my client.  One pays my B/D more money.  I have no duty to use the one that pays the firm more money.
Also, if you are acting as an IAR, you must act in a fiduciary manner.  It does not matter that you are an IAR instead of being your own RIA.

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AllREIT wrote: mikebutler222 wrote: <?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
AllREIT wrote: The firms will do anything to avoid being RIA's since that opens up a big can of worms. The firms are ALREADY RIAs in other sorts of accounts. The issue is how to incorporate that process into what would otherwise be a traditional brokerage account.
Mike, the deal is that brokers are acting as IAR's representing RIA's who run the SMA's towards clients. They are not acting as RIA's themselves. 
That's true of SMA accounts, it's not true of accounts where MS acts as an RIA, and yes, those accounts exist in several forms. They include those accounts where the rep runs a discretionary advisory account (most every firm has some version) and/or when the firm is hired directly as an RIA.
AllREIT wrote:As a Registered Rep, you are an employee of "the firm" with a duty to act in the best interests of the firm at all times, subject to the limitations of NASD wrt to not harming clients. This is where the merrill lynch rule came from.
That’s about as self serving and cynical a way to describe the ML rule as has ever been stated.  The “best interests of the firm at all times” line is a fiction you use with your clients as a sales pitch. You should know enough about the industry to know it’s untrue. The ML rule simply allowed fee-based brokerage accounts to avoid coming under the IAA of 1940 and continue to be regulated under the traditional brokerage rues.AllREIT wrote:Right now its unclear how the SEC will resolve this. Because if it turns out that going forwards brokers have a positive duty to act in the best interests of clients, you are going to see some big changes in the industry.
We’ve ALWAYS had the positive duty to act in the best interests of the client, due suitability, etc. What’s been missing, and has yet to be resolved, is how the new requirement (or at least what seems to be a requirement) of acting as a fiduciary. Being a fiduciary isn’t the only way to act in a client’s interests, although that’s the way the term is being bandied about.
 
 

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This is a fine example about how posting frequently and on all subjects, including those where your scope of knowledge is limited, eventually makes one look like a fool, even if one is generally considered an intelligent person.  I'm not an employee of my B/D either, but even when I was, I had enough sense to put client interests ahead of my employer's.  Anyone who's studied for the series 7 should know better than a foolish generalization like that.
Don't take frequent posting as an automatic sign of intelligence on all subjects.

AllREIT's picture
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mikebutler222 wrote:AllREIT wrote:
As
a Registered Rep, you are an employee of "the firm" with a duty to act
in the best interests of the firm at all times, subject to the
limitations of NASD wrt to not harming clients. This is where the
merrill lynch rule came from.
That’s about as self serving and cynical a way to describe the ML rule as has ever been stated.  The
“best interests of the firm at all times” line is a fiction you use
with your clients as a sales pitch. You should know enough about the
industry to know it’s untrue. The ML rule simply allowed fee-based
brokerage accounts to avoid coming under the IAA of 1940 and continue
to be regulated under the traditional brokerage rues.

Oh please. The ML rule enabled B/D's to evade the responsibilities that the IAA would have put on them and thier reps when dealing with fee based accounts.

The goal of the B/Ds was to create a business model that had all the flavor of fee based but just one calorie.

That is what it has always been about. Creating a "safe space" for
all sorts of shady activities. It's the exact same reason AMP and the
B/Ds are creating a circus over at the CFP standards comittee over this
exact issue.
Either you explicitly act in the best interests of clients, or you don't.

AllREIT wrote:Right
now its unclear how the SEC will resolve this. Because if it turns out
that going forwards brokers have a positive duty to act in the best
interests of clients, you are going to see some big changes in the
industry.

We’ve
ALWAYS had the positive duty to act in the best interests of the
client, due suitability, etc.What’s been missing, and has yet to be
resolved, is how the new requirement (or at least what seems to be a
requirement) of acting as a fiduciary. Being a fiduciary isn’t the only
way to act in a client’s interests, although that’s the way the term is
being bandied about.

If you want to play word games, there are multiple ways to act in a clients sole best interest. If not, there is only one way.

I
have no illusions about this, the B/Ds will fight to create some kind
of "bubble" where the ethical standards applicable to a commision
account (caveat emptor) apply to a fee based arrangement.

My
guess is that the B/Ds will say that their job is to provide a platform
with the best execution, thus acting in the best interests of clients.
Having standards over the quality of advice etc would open up a huge
can of worms and endless litigation.

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these accounts were wrong to begin with. they were knee jerk reactions by wirehouse firms to deal with online competition.
the problem is brokers didn't place their most active trading clients in these accounts,  they placed their least active clients.
the longer im in this business the more i think paying for advice with commissions works best.   or use sma's.

troll's picture
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QUOTE=AllREIT] mikebutler222 wrote:AllREIT wrote:
As a Registered Rep, you are an employee of "the firm" with a duty to act in the best interests of the firm at all times, subject to the limitations of NASD wrt to not harming clients. This is where the merrill lynch rule came from.
That’s about as self serving and cynical a way to describe the ML rule as has ever been stated. The “best interests of the firm at all times” line is a fiction you use with your clients as a sales pitch. You should know enough about the industry to know it’s untrue. The ML rule simply allowed fee-based brokerage accounts to avoid coming under the IAA of 1940 and continue to be regulated under the traditional brokerage rues.
Oh please. The ML rule enabled B/D's to evade the responsibilities that the IAA would have put on them and thier reps when dealing with fee based accounts.
The goal of the B/Ds was to create a business model that had all the flavor of fee based but just one calorie.

You’re as wrong here as you’ve been on this subject all along. The goal was to create a brokerage account that avoided the obvious conflict of interest in commission accounts and the then issue du joir of “churning”.
AllREIT wrote: That is what it has always been about. Creating a "safe space" for all sorts of shady activities. It's the exact same reason AMP and the B/Ds are creating a circus over at the CFP standards comittee over this exact issue.
Again you’re confused, there was nothing “shady” about it, in fact it began to end a shady practice. Now, the CFP and AMP fight, if you think that’s about business ethic as opposed to what it REALLY is, which is a turf battle on the “fee only” front, you’re even more in the dark about this industry than I had thought. In fact, the entire battle by the FIA against the ML rule was a turf battle to begin with. “Fee only” types hated that the “I won’t charge you commissions” sales line they had relied upon had been erased.
 
AllREIT wrote:
Either you explicitly act in the best interests of clients, or you don't.
You don’t have to be a fiduciary to act in a client’s best interests and it’s just juvenile to pretend otherwise.
 
AllREIT wrote:Right now its unclear how the SEC will resolve this. Because if it turns out that going forwards brokers have a positive duty to act in the best interests of clients, you are going to see some big changes in the industry.
We’ve ALWAYS had the positive duty to act in the best interests of the client, due suitability, etc.What’s been missing, and has yet to be resolved, is how the new requirement (or at least what seems to be a requirement) of acting as a fiduciary. Being a fiduciary isn’t the only way to act in a client’s interests, although that’s the way the term is being bandied about.
If you want to play word games, there are multiple ways to act in a clients sole best interest. If not, there is only one way.
There’s no word games required. You simply have to understand the nature of the industry, which you proved from jump street that you don’t get.
 
At least you dropped all traces of your ridiculous claims that reps have a regulatory responsibility to act “in the best interests of the firm” and your ignorance over the various common situations in which firms ALREADY act under the aegis of the IAA of 1940.

troll's picture
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Vin Diesel wrote:the problem is brokers didn't place their most active trading clients in these accounts,  they placed their least active clients.
 
Now there's a theory I hadn't heard before....

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My take, from the point of view of a wirehouse RR, not an Indy, and I get this from my own independent reading, not from any propoganda that the firm has given me:
The court decision ruled that the SEC did not have the authority or power or whatever, to make an exception to the Investment Act for the B/D's. As a result the RR who offers a non discretionary wrap account, acts as, and takes the legal responsibility to act as a fidicuiary. We cannot do that. Fiduciary means that we have a responsibility to "put the clients interests first". This is in contrast to the RR;s responsibility to "recommend investments that are "suitable"".
So a RR can have investments A and B, with BOTH being suitable but A being a bit more expensive and paying more to the RR, thus being a bit more suitable. As a fiduciary, he must recommend B, or he has violated his fiduciary responsibility to the client. A RR can recommend either one since they are both "suitable"
Thats my understanding, I dont claim to be a rocket scientist on this, so be smart and dont attack me.
The SEC HAS NO LEWAY IN THIS, as it is a court ruling, and they must abide. What they have done is ask for relief in the form of 120 days for the affected parties to come up with another way. The wirehouses all have some form of account which would resolve this issue - a fee for advice account, vs a fee in lieu of commish account, and since its a fee for advice, with strict limits as to what can and cannot be done in these accounts, we can act as fiduciaries. However, some wirehouses have more fully developed this platform than others.
We'd all like to think that this is all BS, because we all always act in the best interest of the client. Most of us do. We all know that some dont. My opinion is that a lot of this is nothing more than the fee based planning world, i.e. FPA, etc, wanting to protect their territory
JMHO

troll's picture
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When I go back in my memory bank (small deposit base), I seem to recall that these accounts were a way for firms to generate predictable revenues in bear markets.

AllREIT's picture
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mikebutler222 wrote:
Vin Diesel wrote:the problem is brokers didn't place their most
active trading clients in these accounts,  they placed their least
active clients.

Now there's a theory I hadn't heard before....

That's why NASD said the Fee-in-leiu accounts were unsuitable for most
clients. A commision account would be cheaper for buy-and-hold
investors.

IMHO they B/D's will come up with some kind of split account with one
level of comissions similar to a discount broker and over that a
"subscription" to investment advice.

troll's picture
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AllREIT wrote: mikebutler222 wrote:
Vin Diesel wrote:the problem is brokers didn't place their most active trading clients in these accounts,  they placed their least active clients.
Now there's a theory I hadn't heard before....
That's why NASD said the Fee-in-leiu accounts were unsuitable for most clients.
 
You got a source for that?

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Fiduciary means that we have a responsibility to "put the clients interests first". This is in contrast to the RR;s responsibility to "recommend investments that are "suitable"".
So a RR can have investments A and B, with BOTH being suitable but A being a bit more expensive and paying more to the RR, thus being a bit more suitable. As a fiduciary, he must recommend B, or he has violated his fiduciary responsibility to the client. A RR can recommend either one since they are both "suitable"
Although it seems like splitting hairs in some respects; this is my take on the issue too. 

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mikebutler222 wrote:AllREIT wrote: mikebutler222 wrote:
Vin Diesel wrote:the problem is brokers didn't place their most
active trading clients in these accounts,  they placed their least
active clients.
Now there's a theory I hadn't heard before....

That's why NASD said the Fee-in-leiu accounts were unsuitable for most clients.

You got a source for that?

As early as 2003 NASD was on to this problem.

http://www.nasd.com/web/groups/rules_regs/documents/notice_t o_members/nasdw_003079.pdf

This industry moves very slowly on things that might be profitable to it.

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Dust Bunny wrote:A RR can recommend either one since they are both "suitable"
Although it seems like splitting hairs in some respects; this is my take on the issue too. 

The suitablity standard also opened up a can of worms since it was so
vague pretty much any non-leveraged liquid investment could be defended
as suitable.

Broker: Well, I thought it was going to go up.

NASD: I understand.

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intersting article
http://www.marketwatch.com/news/story/schwab-seen-winner-bat tle-between/story.aspx?guid=%7B5C575B80%2DF63A%2D4992%2D9580 %2DE55C2D4F11B5%7D

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AllREIT wrote: mikebutler222 wrote:AllREIT wrote:
As a Registered Rep, you are an employee of "the firm" with a duty to act in the best interests of the firm at all times, subject to the limitations of NASD wrt to not harming clients. This is where the merrill lynch rule came from.
That’s about as self serving and cynical a way to describe the ML rule as has ever been stated.  The “best interests of the firm at all times” line is a fiction you use with your clients as a sales pitch. You should know enough about the industry to know it’s untrue. The ML rule simply allowed fee-based brokerage accounts to avoid coming under the IAA of 1940 and continue to be regulated under the traditional brokerage rues.
Oh please. The ML rule enabled B/D's to evade the responsibilities that the IAA would have put on them and thier reps when dealing with fee based accounts.
The goal of the B/Ds was to create a business model that had all the flavor of fee based but just one calorie.
That is what it has always been about. Creating a "safe space" for all sorts of shady activities. It's the exact same reason AMP and the B/Ds are creating a circus over at the CFP standards comittee over this exact issue.
Either you explicitly act in the best interests of clients, or you don't.

alreit, why do you continue to write that AMP is heading up a "circus" against CFP standards?  Ameriprise is a RIA, with advisors that are IARs under the IAA of 1940.  If you're going to throw stones, make sure you're aiming them correctly.
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

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Interesting point.
No doubt there is appropriate registration and disclosure, but my impression is a larger issue.
For " financial planners ", it appears the issue would be the apparent conflicts of interest inherent in the whole broker dealer world.
This mutal fund pays the broker dealer soft dollars for marketing events ( sales contests), that fund pays 12b1 fees in addition to the wrap fee you collect, but another fund pays no 12b1, so you mix ETFs and 12b1 funds, but there is an apparent conflict of interest.
So, while there is appropriate disclosure, I guess the "spirit" of the thing is unresolved.
And also, I notice the newest issue of Investment News talks about 12b1 coming under review, finally.
Where do you think all of this is going?
Does any broker dealer have the right to maintain the current structure, with appropriate disclosure? Apparently, and reps could choose to feel good about it all.
But some will choose to focus on the apparent conflict of interest issuces, I don' think it makes one a better or worse person, but there are these nagging questions...
 

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I don’t think 12b-1 fees will ever go away, nor should they.  I do think that 12b-1 fees will be itemized in dollars and a percent on every statement which is a good thing.<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

rialsoon's picture
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They couldn't just go away overnight. I'll bet the old funds would be held, and new $$$ would just go into wrap, at the most extreme.

troll's picture
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AllREIT wrote: mikebutler222 wrote:AllREIT wrote: mikebutler222 wrote:
Vin Diesel wrote:the problem is brokers didn't place their most active trading clients in these accounts,  they placed their least active clients.
Now there's a theory I hadn't heard before....
That's why NASD said the Fee-in-leiu accounts were unsuitable for most clients.You got a source for that?
As early as 2003 NASD was on to this problem.http://www.nasd.com/web/groups/rules_regs/documents/notice_t o_members/nasdw_003079.pdfThis industry moves very slowly on things that might be profitable to it.
 
Nice dodge, but NO WHERE in that report does the NASD say "Fee-in-leiu accounts were unsuitable for most clients.". In fact, it mentions that the Tully report considered these accounts among its "best practices" and goes on to thay they're not appriate in ALL circumstances.
So, I ask again, when did the NASD say "the Fee-in-leiu accounts were unsuitable for most clients"?
 
 
 

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AllREIT wrote: Dust Bunny wrote:
A RR can recommend either one since they are both "suitable"
Although it seems like splitting hairs in some respects; this is my take on the issue too. 
The suitablity standard also opened up a can of worms since it was so vague pretty much any non-leveraged liquid investment could be defended as suitable.Broker: Well, I thought it was going to go up. NASD: I understand.
Wow, you don't have much of a grasp of the concept of suitability...

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Big Taco wrote: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

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 ).

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Mike Damone wrote:I don’t think 12b-1 fees will ever go away, nor should they.  I do think that 12b-1 fees will be itemized in dollars and a percent on every statement which is a good thing.

If they arent itemised out, then they will get built in to the
management fee. I do think capping them at 0.25 would be a good move,
as would requiring that any revenue sharing carry a "black-box"
warning. in plain english.

"This advisor receives  additional cash payments from **** for recomending this mutual fund."

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mikebutler222 wrote:Wow, you don't have much of a grasp of the concept of suitability...

Have you contemplated that perhaps you know less about suitability than you think?

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AllREIT wrote: Big Taco wrote:
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
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 ).
Speaking of Ameriprise, how is it possible that all those CFP's can act as fiduciaries, while peddling mostly proprietary product. It baffles me that they get away with that, but ML SB ET AL, is no longer allowed to offer a fee based account in which you can invest in hundreds of MF's from hundreds of different fund families.

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AllREIT wrote: mikebutler222 wrote:
Wow, you don't have much of a grasp of the concept of suitability...
Have you contemplated that perhaps you know less about suitability than you think?
 
I not only understand suitability, I know what the NASD means by the term. Your little;
REP: "I thought it would go up"
NASD: "I understand"
routine bears no resemblemse to the reality of the NASD or arbitration.
 
 

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Speaking of Ameriprise, how is it possible that all those CFP's can act as fiduciaries, while peddling mostly proprietary product.
They aren't acting as fiduciaries.

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mikebutler222 wrote:I not only understand suitability, I know what the NASD means by the term. Your little;
REP: "I thought it would go up"
NASD: "I understand"

routine bears no resemblemse to the reality of the NASD or arbitration.

Sarcasm?

Although what I describe does happen more than NASD would like to admit, since suitability is such a plastic concept.

Quote:In recommending to a customer the
purchase, sale or exchange of any security, a member shall have
reasonable grounds for believing that the recommendation is suitable
for such customer upon the basis of the facts, if any, disclosed by
such customer as to his other security holdings and as to his financial
situation and needs.

This issue is what are "reasonable
grounds" and how that relates to buisness model in which you get paid
on basis of "purchase, sale or exchange" of securities.

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AllREIT wrote:
mikebutler222 wrote:I not only understand suitability, I know what the NASD means by the term. Your little;
REP: "I thought it would go up"
NASD: "I understand"

routine bears no resemblemse to the reality of the NASD or arbitration.

Sarcasm?

Although what I describe does happen more than NASD would like to admit, since suitability is such a plastic concept.

Quote:In recommending to a customer the
purchase, sale or exchange of any security, a member shall have
reasonable grounds for believing that the recommendation is suitable
for such customer upon the basis of the facts, if any, disclosed by
such customer as to his other security holdings and as to his financial
situation and needs.

This issue is what are "reasonable
grounds" and how that relates to buisness model in which you get paid
on basis of "purchase, sale or exchange" of securities.

IMHO there is a wide gulf between "reasonable grounds" and "fiduciary obligation".   I am dually registered and far prefer to do most of my business in the RIA channel.

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AllREIT wrote: mikebutler222 wrote: <?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
I not only understand suitability, I know what the NASD means by the term. Your little;
REP: "I thought it would go up"
NASD: "I understand"
routine bears no resemblance to the reality of the NASD or arbitration.
Sarcasm?
Although what I describe does happen more than NASD would like to admit, since suitability is such a plastic concept.
You simply do not know what you're talking about. "I thought it would go up" is what a fool would say at an arbitration hearing, just before the NASD cut his head off.
AllREIT wrote: Quote:In recommending to a customer the purchase, sale or exchange of any security, a member shall have reasonable grounds for believing that the recommendation is suitable for such customer upon the basis of the facts, if any, disclosed by such customer as to his other security holdings and as to his financial situation and needs.
This issue is what are "reasonable grounds" and how that relates to buisness model in which you get paid on basis of "purchase, sale or exchange" of securities.

 
 
 
You’re confusing the method by which the rep is paid with the suitability of the particular investment itself. An example; whether it’s a commission account of a fee in lieu of account, putting 45% of an elderly client’s money in a BRIC ETF is a suitability issue.
 
Seriously ALLREIT, we can disagree about passive versus active management, but your comments thus far on the subject of fee in lieu of commission accounts, the NASD’s approach to suitability and the claim that a rep’s legal responsibility is first to the firm have proved, to me at least, you have no idea what you’re talking about.
 
 
 
 
 
 
 

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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.<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
 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…
 

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pratoman wrote:AllREIT wrote: Big Taco wrote:
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
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 ).
Speaking of Ameriprise, how is it possible that all those CFP's can act as fiduciaries, while peddling mostly proprietary product. It baffles me that they get away with that, but ML SB ET AL, is no longer allowed to offer a fee based account in which you can invest in hundreds of MF's from hundreds of different fund families.

I can't speak for "all those CFP's", but proprietary products are not a significant portion of my book.  And most of my prop business is from our VAs, the only products that I'm captive on, but I don't mind, because we have good VA product:  lower than average M&E, good subaccount selection, and Morningstar heads an AA service based on risk tolerance with quarterly rebalance.
A significant portion of my book is made up of fee based accounts where I can offer hundreds of MF's from hundreds of different fund families".

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mikebutler222 wrote: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…
 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?

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joedabrkr wrote: mikebutler222 wrote:
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…
 
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?
 
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" />

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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.
 

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AllREIT wrote: Big Taco wrote:
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
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 ).
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.

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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. 

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anonymous wrote:an ethical RR will do what is best for his client.  An unethical RIA will do what's best for himself.
I agree wholeheartedly. 

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Big Taco wrote:I can't speak for "all those CFP's", but proprietary products are not a significant portion of my book. 

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.

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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.

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AllREIT wrote: Big Taco wrote:
I can't speak for "all those CFP's", but proprietary products are not a significant portion of my book. 
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.
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).

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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.

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a closer look

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Big Taco wrote:AllREIT wrote: Big Taco wrote:
I can't speak for "all those CFP's", but proprietary products are not a significant portion of my book. 
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.
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).

I don't know enough about AMP to know the P1/P2 split etc, but wah I do
know is that public face of AMP tends to be the VUL pushers from P1.
Probably because these are the people doing all the lunch/learns and
cold calls etc.

Even though P1 may be only 30% of total people at one point, b/c the
turnover there is so high, its a large number of people in total.

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