From the June 2008 issue of Investment Advisor • Subscribe!

From a Small B/D, Regulatory and Risk Concerns

Broker/Dealer Advisory Board member Nick Sondel, president and CEO of Harbour Investments, in Madison, Wisconsin, and Broker/Dealer of the Year winner in Division I (up to 199 representatives) could not participate in the physical Roundtable, but he talked by telephone with Senior Editor Kate McBride in late April:

Q: Would Treasury Secretary Paulson's Blueprint--and its potential for one regulator for B/Ds and RIAs--make a difference to your firm?

A: I'm a little bit reluctant to get excited about it because we see so much duplication between the SEC and FINRA...It would be really refreshing to have regulators who understand what our business is.

We have been overregulated as broker/dealers for a very long time and I can't see the day when that's going to change.

On the other hand, there's a huge shortage in the regulation of the independent RIA. . .That's why a lot of people have gotten away from broker/dealers and have gone through some of the extra hoops to have their own RIAs--to avoid regulations--and so far that's been working for them quite well, but they need to be regulated similarly to broker/dealers.

Q: Are you seeing changes in what reps want from you in this market environment?

A: We are seeing more sales in annuities when we judge, through people's risk profiles, that they need some sort of insurance--either income or death benefit, in many cases.

We are diversifying more, when people are not in annuities, and we are also looking at much lower projections of what people should conservatively take out in retirement withdrawals.

Q: What are the challenges for a smaller firm like yours?

A: The challenges have not changed a whole lot--we've always been very focused on bringing technology at a realistic cost, and we have to share those costs with the brokers, but we like to keep it as an a la carte system so we're not forcing technologies on people that they don't want or need. We encourage all of our employees to obtain as many principal's licenses as they can; we're looking to change from a processing firm to a technology firm and an education firm.

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