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.
- Nothing but the Best Execution Along with the many other fiduciary obligations owed by RIAs, firms owe a duty to seek best execution of clients transactions. If they fail to do, RIAs violate Section 206 of the Investment Advisers Act.
Bernie Clark welcomed the attendees of Schwab Impact in Washington Monday morning by encouraging advisors to “start thinking about the next generation of clients,” which he also called “the now generation,” saying that “they’ll be harder to engage and will interact with you in different ways.”
Citing research from its just-released semiannual Independent Advisor Outlook Study (IAOS) of 800 RIAs, Clark said advisors expect that generation to employ “multiple advisors” and to “expect smart, intuitive, evolving technology” from those advisors. There will be increased competition for RIAs which, while “strong,” will also “validate the RIA model.”
That research found that advisors also expect competition will come from two new developments: large, regional RIA firms and online advice providers.
He also cited the latest IAOS study to point out that only 19% of advisors are under 40, and that advisors themselves recognize the “need for a more diverse workforce.”
As for Schwab’s technology initiatives, Clark said Schwab Performance Technologies has released in pilot form a white-labeled, mobile app for advisors’ clients called Schwab OpenView Mobile. Neesha Hathi, Schwab’s senior vice president for advisor technology solutions, noted in a breakout session later Monday morning that mobile technology was necessary to reach both the current crop of clients and the next generation, with some estimates suggesting that 80% of web browsing will be done on mobile devices by 2025.
OpenView Mobile will be more broadly rolled out, Hathi said, in the first quarter of 2014. It will provide clients with access to their Schwab accounts, along with other information that the advisor will be able to pick and choose depending on the clients’ needs and capabilities, all under the advisory firm’s name, not Schwab’s. It will be available for for both Apple and Android operating systems.
The second tech initiative of note is something called Project PM2, a portfolio management software application that will reside in the cloud and will more closely integrate with Schwab’s existing custodial platform. Clark also announced advances on e-signatures and a wire transfer tool for mobile devices, both in pilot now, slated to become more widely available to Schwab advisors “early next year.”
On one other initiative, Clark said that more than 1,000 affiliated RIAs had signed up to be listed on Schwab’s RIA Stands for You Advisor Directory at RIAStandsForYou.com where investors can search for an advisor geographically.
Clark then turned to Schwab’s advocacy efforts on behalf of RIAs, saying “we’ve engaged aggressively” with regulators this year on the proposed harmonization of RIA and broker-dealer regulations.
Harmonization, he said, “feels like dragging us back into the past” and would “add $1 billion in expenses” to the industry without providing any appreciable benefits to end clients. While Clark said Schwab was talking to regulators and legislators regularly, he called on RIAs to “write letters to your members of Congress, visit them and tell them about your business and what makes your model so right for the investors you serve.”
Check out Schwab’s Sonders: Market Remains ‘Quite Cheap’ on ThinkAdvisor.