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.
- Preventing and Dealing with Client Complaints Although the SEC has not provided specific guidance on how client complaints should be handled, a firms policies and procedures should provide clear direction how to do so, as neglecting complaints can exacerbate a bad situation.
“A big part of the conference is about advocacy,” said Bernie Clark, referring to Schwab Advisor Services’ annual Impact gathering in Washington starting Sunday.
With advisor attendee registrations approaching 1,800 (with 31% of attendees being first timers) as of a preconference interview on Oct. 29, Clark, head of Schwab Advisor Services, said that holding Impact in Washington “gives us the opportunity to influence” regulators and legislators.
Specifically, that means that Schwab will be “taking small groups of advisors” to meet with members of the House Financial Services committee, while Clark and Schwab’s legal counsel will take advantage of the venue to meet with the SEC to discuss the commission’s fiduciary rulemaking process and the harmonization of RIA and broker-dealer regulation. Clark pointed out that Schwab’s advocacy efforts were not a do-it-alone strategy, saying that in June it had approached regulators with the Investment Adviser Association (IAA) “and our competitors.”
In addition to welcoming RIAs who already work with Schwab, Clark said Impact would also see the “largest number of prospects ever” attending the show, as advisors contemplating a move toward becoming an RIA and affiliating with Schwab “are being more transparent” than ever.
Impact, he said, is a “gathering of the overall community” and since “advisors are more generous about sharing best practices than any other business” with their peers, the high number of attendees reflects the fact that “successful people like to be around other successful people.”
The RIA community has moved toward an “ecosystem,” as Clark likes to say, that gathers other firms around it with growth as a shared goal. As that community has matured, it’s now become part of a continuum which is as concerned with attracting and growing a younger generation of advisors while successful firms are “thinking of their legacy.”
That maturity of the RIA ecosystem, he said, is also attracting wirehouse brokers who are “not running from something but rather toward” the RIA model. While “we’ve never seen a appreciable spike” in the movement of advisors and assets from the wirehouses to the RIA model, Clark says it’s been a “consistent movement,” and has now become both a business decision and a “life experience” for those brokers. There are “tremendous people” in the wirehouses who nevertheless must operate in a “more conflicted model,” whereas in the RIA model they receive the “latitude to get deep with their clients” rather than operate under a “least common denominator regulatory scheme.”
As part of Schwab’s own investment in the next generation of advisors, Clark reported that it had hosted 10 summer interns this past summer. Those were college students in their junior years, he said, and one has already been hired. Another program that Schwab had earlier announced, its executive leadership program for advisors, is slated to launch on Jan. 1, with instructors from leading universities and business schools like Harvard and MIT.
As for Impact’s roster of guest speakers, Clark said he was looking forward to hearing former Sen. Olympia Snowe, R-Maine, speak. “She’s not irreverent” about Congress, he said, but rather “disappointed,” and in her public speeches she’s attempting to be more influential from outside the Senate, taking a “more centrist” approach.
Michael Lewis, the author and another speaker at Impact, is expected to “start leaking more about his next book,” Clark said, while he's particularly looking forward to the inside-Washington perspective of former congressman and White House Chief of Staff Leon Pannetta.
As for announcements from Schwab during the conference, Clark promised news on the technology front, including e-signatures and e-authorizations, and other fronts. Schwab’s overall goal, he said, is to help its RIAs “sustain their growth.” To achieve that goal, advisors need to move from “getting caught in today” to spending time on their future. At Impact, Schwab wants to “create the space to focus on the future.”