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Form CRS: Prop or Flop?

After all the hype and noise about Form CRS, which was first required to be issued this summer, it appears that the intended audience – investment clients – are generally uninterested in the new disclosures and not engaged in the process of asking questions of their advisers. Research shows that almost no-one who received the new form, among the tens of thousands of clients who did, raised any issue or question with their advisor regarding Form CRS and its use.
Not surprisingly, this logically fits in with the response of clients to required disclosures generally: adding a few new pages with a somewhat different approach to the pile does not engender interest in persons already overwhelmed with information and fine print (much of it irrelevant and/or confusing).

Increasing Regulatory Burdens

When we speak of the costs of government, the first topic usually is taxes, fees, and charges that appear in a myriad of forms and circumstances. We often don’t get past this aspect of governmental burdens and that means some other direct costs are not fully exposed or understood. One that is often mentioned but rarely discussed in detail is the cost to us all of regulations.
Examples of how regulations can cost a great deal can easily be found – here’s one I ran into recently. As almost everyone knows, the pervasive use of the internet, the cloud and their extended family has resulted (naturally) in some folks using the technology in nefarious ways.

Is Best Interest Really Best?

Much of the discussion surrounding the best interest rule has referenced the requirement that investment advisers are fiduciaries to their clients while brokers are not held to that fiduciary standard. Regulation Best Interest and the new customer relationship summary are intended to provide investors with a clear description of the duties and obligations of investment advisers, broker-dealers and dually registered persons and firms. Not surprisingly, this new approach is not meeting with universal approval and acclaim.

Why Percentage Fees?

In the financial industry, as with many other businesses, how clients pay is constantly under discussion and often changing. In recent years, some advisers have touted their focus on having a fee based business as being superior to other forms of payment, particularly including commissions. Charging a fee based on assets under management is a very common practice and has the benefit of being relatively simple to implement and certainly free of the conflict of interest for advisers who make their money through commissions.

Considering Schwab’s New Advisory Subscription

Schwab recently announced a new offering for investors – a subscription plan which includes both investment management and financial planning. After an initial setup fee of $300, the charge is a fixed $30 monthly. The fee includes “unlimited” access to certified financial planners. When compared to the fee structure used by most investment advisers, this is an offering that could cost investors much, much less than they pay to an adviser who charges a percentage of assets under management.
Much has been said about how this may affect the financial industry and, in particular, investment advisory firms.

Making Your Business Stand Out

A common theme in the endless flow of material on the internet and in more traditional print format is the importance of showing potential clients or customers why your business is different and they should choose you as a resource. Many different suggestions are made regarding how you might better market yourself or attract certain types of clients. However, given constant exposure to a variety of businesses and their practices, the most obvious way to stand out is to do what you say you are going to do.

State Specific Fiduciary Rules: How Far May They Go?

With the failure of the DOL Fiduciary Rule and the sluggish pace of the SEC Best Interest proposal, many states are looking at taking their own steps towards strengthening the rules for investment professionals so as to provide more protection for consumers of investment advice and related activity. This state action is receiving mixed reviews for a variety of reasons.
Apart from the polar opposites of the rules are not strong enough and the rules are too limiting for investment professionals, there are other important concerns.

Take a Break Yourself

It is easy at this time of year to be caught up in all the hustle and bustle of the year end – holidays, implementing end of year financial planning and tax related tasks, meeting numerous demands on your time and energy from all too many directions. And if that is not enough, then there are always the extra pressures from weather, the stock market, dysfunction at every turn.
So this year, consider doing yourself (and your family, business associates, clients and friends) a favor and take a break from some of those pressures.

What's In Your Advisor's Toolkit?

The financial industry is broad and deep with respect to the approaches, tools, products and techniques that are available. Some are well tested and known while others are brand squeaky new. It is almost impossible for an advisor to be familiar with and use all of these various items and so it becomes important for you as an investor to understand what your advisor does.
We all know the saying about how to a hammer everything appears to be a nail. In the context of your finances, it is probably a good idea to avoid an advisor who always gives the same advice and recommendations for every client.

The Importance of Formal Work Place Processes

An established work flow and process is critical to the smooth functioning of almost any business and the financial advice business is no exception. All too often, a business gets started and the founders do not take the time to fully work through how the recurring tasks should be planned out to ensure both consistency and thoroughness. When it becomes apparent that one needs to get a solid process in place, it is often too late to get it done easily and without interfering with the necessary day to day tasks.
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