More On Legal & Compliancefrom The Advisor's Professional Library
- Differences Between State and SEC Regulation of Investment Advisors States may impose licensing or registration requirements on IARs doing business in their jurisdiction, even if the IAR works for an SEC-registered firm. States may investigate and prosecute fraud by any IAR in their jurisdiction, even if the individual works for an SEC-registered firm.
- Client Commission Practices and Soft Dollars RIAs should always evaluate whether the products and services they receive from broker-dealers are appropriate. The SEC suggested that an RIAs failure to stay within the scope of the Section 28(e) safe harbor may violate the advisors fiduciary duty to clients, so RIAs must evaluate their soft dollar relationships on a regular basis to ensure they are disclosed properly and that they do not negatively impact the best execution of clients transactions.
James Glassman, a former undersecretary of state and Washington Post writer and television host, and current columnist for Kiplinger's Personal Finance, told the more than 500 attendees at the Insured Retirement Institute's marketing conference in New York on February 22 that while the U.S. economy grew at an annual rate of 3.5% from 1960-2003, moving forward growth will more likely average 2%, or even less. Glassman suggests that growth will be hindered by the country's growing debt--"It's more difficult to move ahead if you've got this big load on your back"--and by changing demographics, most notably the fact that "the young cohort won't be big enough to support the older cohort," as evidenced by the shrinking worker-to-retiree ratio, which stood at 45 workers to each retiree in 1945 and was 5 to 1 by 1960, and which now stands at 3-1, with the consensus projection of there being a two-to-one ratio by 2030.
While admitting that this ratio could change if Americans start retiring later and if immigration increases, and that "history is not a perfect guide to the future," nevertheless Glassman predicted that "we'll never get back to 5-1, much less 16-1."
There's another reason why growth will moderate, he says: lack of political will to force Americans to take more responsibility for their own retirement. He says healthcare reform has been rejected because Americans "think government doesn't do a good job of fixing things," and "because it costs too much."
By contrast, Glassman is "bullish on emerging markets," noting that while their faster growth than developed nations is a "recent phenomenon," those nations are better poised for continued growth because they are, in general, more stable debt wise and demographically, and are not "saddled with the legacy costs" of programs like Social Security and Medicare. Glassman predicted that increasingly, those nations are "going to buy our companies, not just our bonds."
Cathy Weatherford, president and CEO of the Investment Retirement Institute (IRI), formerly known as NAVA, the National Association for Variable Annuities, said there were 530 people preregistered for the two-day conference in New York, including some 50 advisors for whom a special track was created for the first time.