More On Legal & Compliancefrom The Advisor's Professional Library
- Whistleblowers A whistleblower is any individual providing the SEC with original information related to a possible violation of federal securities law. The Dodd-Frank Act established a whistleblower program that enables the SEC to reward individuals who voluntarily provide such information.
- Risk-Based Oversight of Investment Advisors Even if the SEC had a larger budget and more resources, it is doubtful that the Commission would have the resources to regularly examine all RIAs. Therefore, the SEC is likely to continue relying on risk-based oversight to fulfill its mission of protecting investors.
Schwab Advisor Services said that a "persistent undercurrent of uncertainty" at the wirehouses was prompting many wirehouse brokers to take the independent route. Supporting that claim, Schwab reported August 27 that in the first six months of 2009 74 advisor teams had joined the RIA custody arm of Charles Schwab & Co., compared to 48 advisory teams that had cast their advisory lot with Schwab in the same period of 2008.
In a prepared statement, the Schwab executive in charge of its Advisors Turning Independent (ATI), initiative, Barnaby Grist, said the advisors making the move believed the RIA model allowed them to provide better service to clients and provided a better chance for the advisors themselves to enjoy "greater long-term financial success."
Grist, managing director of strategic business development for SAS, said that Schwab had released a new report--A Case for Starting or Joining a Registered Investment Advisory (RIA) Firm--to help advisors do just that.
The report includes a worksheet that favorably compares the compensation benefits of running an RIA firm versus accepting a forgivable loan from a wirehouse or similar institution, concluding that owners of successful RIA firms can earn "69% to 73% net compensation, or owner's income plus profit, less expenses for non-owner professional salaries," and that the "average RIA owner typically earns 60% to 65% net compensation."
The report can be downloaded here.