More On Legal & Compliancefrom The Advisor's Professional Library
- Trading Practices and Errors When SEC-registered investment advisors conduct annual audits of firm policies and procedures, they should pay close attention to trading practices. Though usually not required to, state-registered advisors should look at their trading practices and revise policies that do not fully protect clients.
- 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.
“If I was a betting man, and I’m not, I would bet heavily on the inability of government to get anything done,” said MarketCounsel’s Brian Hamburger on Wednesday at Schwab Impact 2012 when asked about regulation post-election. “And this bodes well for investment advisors.”
The reason, he continued, is that elected officials have “so many bigger issues to deal with, it’s hard to believe they’d waste their time on this.”
If new regulation is in the offing, Hamburger (left) added, it would be something to do with a new SRO.
“What we’re telling clients is that they might have to tweak their business model here and there, but nothing will happen that would be a sea change in what they do. Be aware, but don’t base business decisions on it.”
When asked whether advisors should therefore not worry too much about the regulatory environment, Hamburger said, “We’re not telling them to calm down. I think advisors have been told too often to calm down.”
By that he meant advisors should get involved from a legislative standpoint.
"I’ve probably spoken to more senators and congressmen in the past year than at any other time, and advisors need to make themselves known as well, if only because many politicians don’t understand the industry they’re attempting to regulate," he said.
As for the firm itself, Hamburger noted 2012 was the sixth straight year MarketCounsel made the Inc. 5000 list of the fastest growing companies.
“We’re in an ideal spot, and our growth reflects the growth of the industry overall,” he said.
He explained a new initiative that he said would “redefine how advisors think about the move to the independent channel.”
“Until now, we had to layer in all sorts of discretion to make sure the advisor wasn’t violating his duty to his firm or clients before making a move. Now, we have structures already in place that we sell them, which can then be customized. It’s similar to how a model home works, which is generic at first but can then be suited to the owner. It will make the move take days, rather than the normal two to three months. We sell them the keys to the castle.”
MarketCounsel, which is headquartered in New York, had its business continuity plan put to the test during Hurricane Sandy. Since the firm specializes in developing business continuity plans for other firms, clients were watching to see how it fared.
“It was a little harrowing,” he concluded. “We learned a lot, but ultimately we came through just fine
Check out complete coverage of Schwab Impact 2012 at AdvisorOne, including: