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Industry Spotlight > Broker Dealers

Broker/Dealer News

By Staff Writer

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Fidelity’s clearing arm for broker/dealers, National Financial, announced several new online service technology tools that National Financial says will allow brokers and advisors to spend more time with clients. Noting that an estimated 32% of brokers’ time is spent on administrative and service tasks, the tools include streamlined account set-up and transfer of assets capabilities, e-notification of customer statements and trade confirmations, as well as enhanced messaging and alert capabilities on Service Center, National Financial’s online platform for managing service requests. National Financial’s enhancements to Service Center, which it says is used by more than 90% of the company’s 300 correspondent clearing-firm clients, are designed to automate various service requests, including prioritized time-sensitive updates, actionable response instructions, and secure alerts via e-mail or mobile devices.

Brokers are encountering “tougher tactics” from their former wirehouse firms when transitioning to independence, notes Patrick Burns, of the Law Offices of Patrick J. Burns in Beverly Hills, in his most recent Breakaway Broker newsletter. “We have noticed a sharp increase in the number of collection actions initiated or threatened against departing brokers with respect to promissory notes, retention bonuses, and the like,” Burns says. “The days of easy settlements for a small percentage of the amount due by a departing broker to his or her former wirehouse firm are largely gone.” For instance, Burns says wirehouse firms continue to take legal action against departing brokers. His law firm has been following Morgan Stanley Smith Barney (MSSB) and its recent court filings. For example, on March 3, MSSB filed for a temporary restraining order in the U.S. District Court for Eastern District of Virginia, against Colleen Kavits, Gary Frey, and The Kavits/Frey Group, Burns says. Burns says that several problems appear to have occurred during the transition, including a misunderstanding about client data and how the departing MSSB brokers were supposed to comply with the Protocol for Broker Recruiting, commonly called the Protocol.

The first Financial Professional Outlook (FPO), a quarterly survey of U.S. financial advisors by Russell Investments, shows a trend toward increasing allocations to equities, particularly in emerging markets and non-U.S. equities. Based on input from 900 advisors around the nation, 53% report increasing allocations to emerging market equities, and 49% say the same about increasing allocations non-U.S. (developed market) international equities. The survey also shows some movement from the “flight to safety” sidelines as U.S. Treasuries (47%), high-yield bonds (33%), and cash (33%) top the list of asset classes that advisors plan to decrease allocations to over the next 12 months. The survey also notes that when asked about clients who are five years from intended retirement, half of the respondents said these clients desire to be ‘slightly less’ aggressive. Only 14% said they see no change in their clients’ risk appetite, while less than 10% said their clients showed a desire to be ‘significantly’ or even ‘slightly more’ aggressive. The survey also indicates that advisors recognize the need to spend more time with clients. When asked how client demand for their time has changed compared to a year prior to the market low point of March 2009, about 60% said it had increased either significantly (18%) or slightly (43%). Fewer than 20% said it had decreased slightly (12%) or significantly (8%). The remainder reported no change.

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