Plus, what a Smith Barney breakaway team is finding out about financial plans

August 12, 2010 — 3:50 AM UTC by Elizabeth MacBride


Elizabeth’s note: As I do once a month, I scanned the RIABiz stats for interesting nuggets that hint at advisors’ mindsets. At the bottom of this post summing up what I found, you’ll also see a news brief that I came across as we were reporting the story about RIA vacations. A team of Ameriprise advisors I talked to in Leesburg are discovering, and reveling in, the way that financial planning is helping them gather assets and develop closer relationships with clients.

In July, advisors were absorbed by the hints of the new, more aggressive SEC emerging in Washington, D.C. In the wake of the financial crisis and the reform legislation that empowered the SEC even more than it had been, the commission seemed to be setting the tone when it issued a controversial new proposal to cap 12b(1) fees and settled its lawsuit against Goldman Sachs. As usual, advisors were also vitally interested in technology, especially new moves by custodians to integrate third-party software programs with their portfolio management systems. Rounding out our top 10 this month were a couple more posts on the question of the evolution of the RIA business, and one sparkling story about a small RIA that’s just been “discovered” and Les Abromovitz’s column about advertising.

Top 10 stories

1. How the new 12b(1) fee restrictions could transform the financial advisory industry

2. How financial reform gives the SEC new bite; plus at least five other things advisors ought to know about the legislation

3. A close look at Tamarac’s Advisor 9 and its strategic use of Schwab software

4. HighTower wins big UBS team and clinches 'critical mass’

6. Bob Veres’ vision: Scalable, multi-partner RIA firms will be profitable and powerful enough to beat the wirehouses

7. 8 ways that the RIA business is achieving scale at breakneck speed

8. 9 things to know about the 'truth’ concerning RIA use of social media

10. How far can RIAs go with advertisements?

One window into the war between the giants?

While the number of visitors to RIABiz that came via Microsoft Explorer stayed almost flat, the number that came via Google Chrome jumped almost 15%, and the number that came via Apple’s Safari also climbed, by more than 10%. Both Apple and Google are aiming to take market share from Microsoft in the market of serving small businesses.

Tiring of the Schwab/Goldman saga?

When news broke that Charles Goldman and the Charles Schwab Corp. had agreed to go to mediation over the former Schwab executive’s claim that the company owes him more than $700,000 in severance pay, Brooke and I expected to see searches for Charles Goldman on RIABiz spike [they have previously]. We’re written two or three stories about Goldman. But, advisors seemed to skate right over the news — maybe because the end of the saga is in sight, and the dispute is likely to be settled behind closed doors.

Breakaway brokers find gold in financial planning

Consultants and best-practice gurus are always reminding advisors that they ought to look for new assets right under their noses: with their firm’s existing clients.

More advisors are beginning to take their advice, as this study showed: Nearly half of advisors now charge clients to manage held-away assets.

“In our recent survey about billing on held-away assets, we found that nearly half of those surveyed are billing for the advice they provide. That’s good news,” said Cythia Stephens of ByAllAccounts. “The other half, however, said they are not billing on held-away assets because they simply don’t know how. So clearly a tremendous opportunity exists to educate advisors about how to gain access to these assets, how to explain the value of doing so to clients and how to actually bill them for the value delivered.”

A team of brokers who broke away from Smith Barney to form an Ameriprise franchise is finding out that its clients had some assets they didn’t know about. As the team does more financial planning, they are uncovering those assets and finding ways to consolidate them.

Chris Harvey, a former Smith Barney broker and co-owner of the franchise in Leesburg, said he’s expecting a FedEx package containing a million-dollar IRA rollover from a long-time client any day now.

“I knew he had it out there,” he said. “But if I hadn’t done the financial plan with him, I don’t know that he would have felt as compelled to bring it here.”

“Producing the plan to help the client map out their retirement lifestyle with the required supporting cash flow encouraged the client to consolidate his holdings with me,” Harvey said. “With other clients the planning is uncovering various insurance needs as a source of additional business & service that may have gone unaddressed in prior portfolio management at wire houses, e.g. long term care coverage, estate tax funding of irrevocable trusts, legacy planning, life coverage needs, disability coverage needs, and so forth.”

“It also is causing clients to consolidate old 401Ks into Ameriprise IRAs, getting clients to deposit securities held in safety deposit boxes that I previously did not know about, and other sources of gathering more assets and increasing production opportunities.”

Meanwhile, the franchise recently won a big financial-planning victory: It was chosen as the official financial planner of the Town of Leesburg, after town administrators interviewed five or six firms.

The town’s 1,000 employees will get a card listing Ameriprise Financial on it, good for a discount on a financial plan. “We should see those coming in the door in September,” Harvey said.

The new franchise’s clients may not be happy about the news that Amerprise will impose a whopping $80 fee on accounts between $100,000 and $500,000. Investment News broke that story yesterday.

Mentioned in this article:

NCS Regulatory Compliance
Consulting Firm
Top Executive: Mark Alcaide, COO/Partner

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