Photo Gallery: Gallery- On the Road With WealthManagement.com: Highlights from FSI and TDAI Conferences

IBD Influence on Capitol Hill Grows

One theme of the Financial Services Institute’s OneVoice conference was the increasing influence of the advocacy group in Washington. In 2010, the group’s budget was $3.5 million, and for 2013, it’s projected to be more than $7 million. The group now has 35,000 financial advisor members and over 100 financial services firm members. This year’s conference had record attendance of 750, up from 600 last year. David Bellaire, executive vice president and general counsel of FSI, said the group has the greatest effectiveness with FINRA and the SEC. They’ve invested a lot in having a constructive working relationship with the regulators. “We are not bomb throwers.”

Busting Investor Misconceptions

Investor misconception: “Missing the market’s best days is the worst thing I could do to my portfolio.” Investors are often encouraged to “stay the course,” with the warning that missing the 10 best days could drag down the performance of their portfolio. But Tracy Fielder, product management director and strategist of Rethinking Risk at Invesco, says that’s just wrong. During a session at the TDAI conference, Fielder said that the truth is, the market’s worst days are just as important as its best days (and maybe even more). For example, a $1 investment in 1927 would have grown to $71.21 by 2011, including the best and worst days. If you missed the 10 best days of market performance, it would’ve grown to only $23.62. But if you exclude the worst 10 days, that $1 would have returned $226.14, more than tripling the overall $71.21 growth. Remain invested, but seek to avoid catastrophic losses, Fielder says.

More Advisors Trading Options

More advisors are trading options to protect their clients’ on the downside and to provide diversification, said speakers at the TD Ameritrade Institutional conference last week. According to TDAI President Tom Nally, options trading has grown 19 percent each year for the last 10 years. Also, more than half of FAs with $100 million or more in assets are using options. Peter Dorsey, managing director of institutional sales, says the firm’s options trading volume is up 30 percent, as investors are more interested in protecting the downside than participating in the upside.

Ron Rhoades Is at It Again

Ron Rhoades, the former chair of NAPFA, has been outspoken (to put it lightly) about his distaste for FINRA. And a regulatory panel during the TD Ameritrade Institutional conference was no different. In discussing whether FINRA should be the self-regulatory organization for RIAs, Rhoades, an advisor, attorney and professor, said FINRA can’t even regulate its own broker/dealers, referring to scandal after scandal that has come out about the brokerage industry. “Time has come to disband FINRA, not expand FINRA,” Rhoades said, to an applause. Instead, the SEC should use its limited resources more effectively. Camping out for weeks at a time at an RIA firm to conduct an audit is not effective, he said. “Why treat us as criminals?”

The Oprah Moment

During his opening keynote, Tom Nally, president of TD Ameritrade Institutional, said that a few lucky advisors would win free access to iRebal, a rebalancing system, on the firm’s Veo platform. Attendees just had to look under their chairs to see if they had the winning ticket. But soon, people started realizing that everyone in the room had a ticket! The firm will roll out the web-based version of the software to all of TDAI’s advisors this summer.

Prime Your Clients

Carol Craigie, professor at the College for Financial Planning, tells advisors at a TDAI conference panel that they can use the insights from behavioral economics to increase their business. One trick? Don’t spread consumer financial magazines around your office. The last thing an advisor needs is a client who just saw headlines about Wall Street shenanigans, volatile markets and “five must-own retirement stocks.”

Push Documents To Clients

Robert Krugman, Broadridge’s Vice President of Digital Strategy, suggests that delivering client communications electronically may come down to this: Using Apple’s Newstand App in iPhones and iPads. Deliver magazine-like content, along with personalized statements and performance reviews, and push it to the client’s mobile device. “As soon as you are sure that the other person on the end of that communication chain is who they say they are, all sorts of things become possible.” Some mobile advisors are already using AirPlay and AppleTV to give presentations in clients’ homes.

You Built It, But No One Came

Advisors and clients clamor for technological innovation, but when it comes to adoption rates, their enthusiasm evaporates. Consider that Broadridge Financial Solution has seen less than 30% of clients adopt electronic portals to their accounts, despite the fact that everyone says they want it. Something as simple as electronic signatures continue to bedevil the industry, especially when there are no standards among compliance, operations and clearing firms over their validity and proper use.

The Latest Old-Fashioned Way To Communicate

Email (email!) will be a communication relic to members of the younger generation more trusting of mobile texts and cloud-based social media platforms. “With Gen Y, the only reason they use email is because work makes them. In their personal lives, they don’t use those tools. Tie that fact into the big migration of wealth. Advisors say I knew how to communicate with the grandfather. I have no idea how to communicate with the kids,” said Broadridge’s Robert Krugman. The kids call email “inboxing,” said Movenbank founder Brett King, and consider it the way their parents communicate.

Great Rotation? Or A Stampede?

Amid much consternation over the theory that investors have started pulling money out of fixed income and putting it back into the stock market, Patrick Maldari, senior portfolio manager for Artio Global Management, asked a pertinent question. “So let me get this straight. From March 2009 to Sept. 2012, while there has been some $500 billion taken out of equity mutual funds, the S&P 500 is up 110%. And now is the time the retail investor decides to get into the market?”

Best Shot

Pat Benatar, The four-time Grammy winner and mainstay of early MTV with hits like “Hit Me With Your Best Shot” and "Love is a Battlefield" closed out the TDAI conference with a private concert for attendees. According to Nexus Strategy founder, industry consultant, occasional WealthManagement.com contributor and music critic Tim Welsh, “She crushed it.”

Gallery- On the Road With WealthManagement.com: Highlights from FSI and TDAI Conferences

IBD Influence on Capitol Hill Grows

Busting Investor Misconceptions

More Advisors Trading Options

Ron Rhoades Is at It Again

The Oprah Moment

Prime Your Clients

Push Documents To Clients

You Built It, But No One Came

The Latest Old-Fashioned Way To Communicate

Great Rotation? Or A Stampede?

Best Shot

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Gallery- On the Road With WealthManagement.com: Highlights from FSI and TDAI Conferences

IBD Influence on Capitol Hill Grows

Busting Investor Misconceptions

More Advisors Trading Options

Ron Rhoades Is at It Again

The Oprah Moment

Prime Your Clients

Push Documents To Clients

You Built It, But No One Came

The Latest Old-Fashioned Way To Communicate

Great Rotation? Or A Stampede?

Best Shot

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WealthManagement.com

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Search WealthManagement.com