More On Legal & Compliancefrom The Advisor's Professional Library
- The New and Improved Form ADV Whether an RIA is describing its investment strategy in advertisements or in the new Form ADV Part 2, it is important the firm articulates material risks faced by advisory clients and avoids language that might be construed as a guarantee.
- Agency and Principal Transactions In passing Section 206(3) of the Investment Advisers Act, Congress recognized that principal and agency transactions can be harmful to clients. Such transactions create the opportunity for RIAs to engage in self-dealing.
A FINRA arbitration panel just awarded ex-Morgan Stanley advisor Vincent Romano $525,000 related to his claim of being unfairly terminated for running for a seat in the Illinois House of Representatives. He argued that Morgan Stanley had political motives in keeping the reform-minded advisor out of office.
Morgan Stanley (MS) says such a claim is “unfounded,” maintaining that it terminated Romano for breaking rules associated with outside business activities. “We believe the firm’s instructions were clear, and respectfully disagree with the panel’s conclusion," the firm said in a statement. (The advisor, who had worked for the wirehouse for roughly eight years, did not win his November 2012 election.)
Financial services organizations have been encouraging advisors to jump into politics. The Financial Services Institute, for instance, asked Ohio representative and independent advisor Heather Bishoff to lead a session on what’s involved in the decision-making and logistics of running for office at its September 2013 national conference.
How tough is to be both advisor and politician?
“The balancing is quite difficult,” said Amanda Murphy, a Florida representative and an employee advisor with Raymond James (RJF) in Tampa, Fla. “Technically, serving in the legislature is a part-time job, though it doesn’t feel like it!”
Murphy says she spoke at length with her branch manager before jumping into a special election last year. She also discussed the situation with compliance and legal staff at Raymond James.
“You have to have someone good in your office to take care of clients when you’re not there,” Murphy explained in an interview with ThinkAdvisor. “I’d been going out two days a week to network, and now that is my time for legislative duties.”
Technology makes it easy to check email from clients at all times, she notes. Plus, she keeps her two jobs separated by having a different cell phone for each role.
As for the more delicate task of mixing politics and business, Murphy says her clients have generally been supportive. “Two clients mentioned it, said they knew me and my beliefs and were OK with the situation,” she explained, as long as she didn’t discuss certain political topics.
Would she recommend taking on the life of an advisor/politician? “It comes down to how much of your life you want to give up,” the advisor said. Both jobs are about helping people and are, hence, fulfilling, but they are also demanding and can limit family time, she says.