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.
- U.S. Securities and Exchange Commission Information This information sheet contains general information about certain provisions of the Investment Advisers Act of 1940 and selected rules under the Advisers Act. It also provides information about the resources available from the SEC to help advisors understand and comply with these laws and rules.
Prospera Financial, The Investment Center, Questar Capital and Cambridge Investment Research are the 2014 Broker-Dealers of the Year. Those are the four IBDs whose own representatives gave them the highest ratings in Investment Advisor magazine’s 24thannual reader poll, which was conducted on ThinkAdvisor.com in June.
Nearly 3,000 reps participated in the voting, ranking their BDs in 15 different categories; those BDs who garnered the highest average rep rating in each of four divisions, measured by the number of producing reps, receive the annual award.
Running an independent broker-dealer of any size has never been easy, but the turmoil surrounding the IBD industry has been particularly acute over the past year, marked by a steep upswing in industry consolidation, an increase in affiliation options for reps and a greater regulatory burden. IBD leaders must also face the industry-wide demographic issue of an aging advisor force, the costs of staying current on technology, including competition from robo-advisors, and the need to attract younger clients as baby boomers move into retirement. The virtues of forward-looking, flexible leadership becomes even more important in such a business atmosphere.
In a day-long, in-person roundtable discussion on Aug. 5 in Chicago, leaders of the four winning BDs met with Investment Advisor editors to discuss that turmoil as represented by four different scenarios. The results of that conversation can be found in the September 2014 cover story of Investment Advisor magazine, along with additional content, including video interviews with those leaders, that will appear on the 2014 Broker-Dealer of the Year home page on ThinkAdvisor.
As an indication of the level of discourse at that roundtable, here are excerpts of how the leaders of the 2014 Broker-Dealers of the year responded to the first scenario in the discussion:
One of your top-producing reps has asked that an alternative investment be added to your approved list. You’ve considered this investment two years before, and you know your biggest competitors have placed it on their approved lists. However, in your prior due diligence, you decided it was too risky. What do you say now to this top producer, who is adamant about using this investment?
Broker-Dealer of the Year in Division IV (more than 1,000 representatives): Cambridge Investment Research
The founder, chairman and CEO of Cambridge, Eric Schwartz, responded to this hypothetical scenario by arguing that “if you looked at our top producers, if anything they are less interested in the innovative product than the smaller producer. They've been around a little longer; they know that innovation is good, but maybe the barber should shave on somebody else's face first.”
Minneapolis-based Questar Capital's President and CEO Kevin Bachmann said that “if two years ago we didn't look at it and top rep asked us to look at it again, absolutely--that's the relationship side of this business. If it hasn't changed, we are going to be very transparent: ‘Here's why we're not comfortable with it.’ But you have to give them alternatives; there are plenty of products out there that are not that different.”
Broker-Dealer of the Year in Division II (200 to 499 representatives): The Investment Center
This Bedminster, New Jersey-based firm is led by President Ralph DeVito. As chief compliance officer for the firm, Doug Wright said during the roundtable, “One thing that we pride ourselves on in our compliance department is that we'll never say, 'No,' and not give you a reason. [...] We'll come back to them [and] tell them why we're not approving it, and say, 'Here's an alternative. This is how you get to the point that you want to get to with your clients.'"
Broker-Dealer of the Year in Division I (up to 199 representatives): Prospera Financial Services
Dallas-based Prospera’s principal and president, David Stringer, says “our vision is to be the gold standard for boutique firms.” In responding to this scenario, Stringer said that “part of our vetting process on the front end is to share our philosophy around compliance. It really is to protect our advisors and our clients.”
- View the 2014 Broker-Dealers of the Year home page.
- View the complete rules for the 24th annual Broker-Dealers of the Year balloting.
- View Investment Advisor's 2014 directory of independent broker-dealers.
- View "Advocates," the cover story of the September 2014 issue of Investment Advisor.