Advisors are professionals who must concern themselves with the minutiae of the markets and the often conflicting messages emanating from not just the U.S. economy, but China’s, Brazil’s, and Ireland’s in an increasingly shrinking investing world. To build financial plans and then to implement an investing strategy that meets clients’ needs is a full-time job in itself. But most readers of AdvisorOne and of Investment Advisor and Research magazines are also small businesspeople who are either independent or independent-minded. You may not have learned about practice management while studying for your CFP or CFA or getting your training in a wirehouse or insurance company, but you are living practice management on a day-to-day basis.
That’s why we strive to present comprehensive coverage of the trends around practice management—of best practices and benchmarking tools you can use—and of the regulatory and legislative developments that affect your businesses now and in the future.
In this article, we’ll present the top practice management “stories” of 2010 as evidenced by the traffic on AdvisorOne.com and our own editorial instincts and experience. There are many more than five “top” stories, of course. Ones that come to mind include the rise of mobile technology by and for advisors, the increased role of outsourcing companies to meet advisors’ portfolio-building and other business needs and independent BDs’ dodging a legislative and executive branch threat to the independent-contractor business model. Still, these five stories stand out.
Top Story No. 1: Dodd-Frank
In 2009 as the financial crisis was winding down, Mohammed El-Erian told attendees at Morningstar’s annual investment conference that they should “get used to having the government as your partner.” That partnership has been brought to the fore as never before with this year’s top practice management story: the Dodd-Frank financial services reform law. Developed in response to the financial crisis of 2008-2009 and scandal-mongerers like Bernie Madoff, the law is typical Washington in that it will have nearly as many unintended consequences as intended ones. For advisors, Dodd-Frank is like the best of presents—already having an impact in 2010, it will keep on giving in 2011 and the years to come, but especially next month when a number of SEC studies are due to be released—including one highly anticipated study on imposing a fiduciary standard on all advice givers.
A related big story from 2010 has to do with the SEC itself. Congressional failure to give it adequate funding, including making the Commission self funding, may well ease the way for FINRA to become the SRO for RIAs. The independent broker/dealer community in the form of the FSI has already endorsed FINRA for the job, which FSI’s Dale Brown argued will make for a level regulatory playing field.
Top Story No. 2: Breakaway Brokers, More Choice for Advisors
The rise of firms like High Tower Advisors, the resurgence of serial advisory firm acquirers like Joe Duran’s United Capial, the entry of RBC Wealth into the RIA custody business, Pershing upping the technology ante with NetX360 and moves from Schwab, TD Ameritrade and other investing platform providers to cut costs for advisors’ clients, especially through lower-cost ETFs, are all signs that the independent advisor is highly valued…