More On Legal & Compliancefrom The Advisor's Professional Library
- 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.
- 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.
“I don’t have a pick, since the Dolphins aren’t in it.”
Football is something of a passion for Marshall Leeds, so the Super Bowl seemed a good place to start the interview.
But as usual, the gregarious group chairman and CEO of Summit Financial Services was ready to surprise. Jumping on his smartphone, he began looking for legendary Miami Dolphins coach Don Shula’s pick as a proxy, as Shula just happens to be Summit’s company spokesman.
“I was just celebrating the 40th anniversary of the 1972 undefeated Miami Dolphins with Shula, one other person and the team,” Leeds (right) nonchalantly told AdvisorOne on Tuesday at FSI’s OneVoice Conference in San Diego.
“Don Shula hasn’t given his pick yet,” he added after a quick search.
Turning to the independent broker-dealer industry and the issues it faces, Leeds noted that it’s his 30th year in the business.
“You know, I’m very direct,” he stated, somewhat obviously. “When I started, everyone gave 90% payouts and nothing up front. That was a great model, but now we’ve taken a great model and made it lopsided.”
He added that “we make less and advisors expect more. We created margin compression. It only results in less service for advisors, so it’s a lesson in being careful what you wish for.”
As a solution, “everyone is coming up with their own proprietary products to get those margins back. You can’t tell me your money managers will do better than the best money managers in the world.”
As for regulation, Leeds was also direct.
“It’s a simple issue for me. Like the Obama tax, it’s here to stay, just deal with it. It’s a cost of doing business.”
When meeting with other CEOs at the conference, he said, he asked them what their No. 1 issue was for 2013.
“The answer is always to drive recruiting,” he said. “The No. 1 issue should be retention if an advisor leaves a firm; 99% of the time it’s the firm’s fault, shame on you. If you bring a guy in, he’ll do 70% of his business in the first year. You’re already in the whole for those transition costs. It will take two years to replace that production.”
He noted the firm has 320 advisors, and they average more than $300,000 in GDC.
“We are actually under in the average age of our advisors,” Leeds concluded. “The industry average age is 52, but our average age is 49. We mainly a recruiting are advisors from other independent broker dealers, which is a perfect example of them not getting what they were promised.”
Check out complete conference coverage at AdvisorOne’s FSI OneVoice 2013 enhanced landing page.