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How vendors fail RIAs -- and themselves in the bargain -- by insulting RIA intelligence

Anything with a whiff of closed architecture, overcharging, inauthenticity, opacity or idiocy masquerading as information is a long-term credibility corrosive

Author Brooke Southall December 9, 2015 at 12:42 AM
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Brooke Southall: RIA vendors are selling the wrong product, selling it in the wrong spirit or marketing it in the wrong way.

Philip Palaveev

Stephen Winks

Stephen Winks

December 9, 2015 — 11:40 PM


If it were only true that professional standing in advisory services were part of the discussion, we would have none of the controversy about acting in the best interest of the investing public. The insularity of publically held brokerage firms have made personal ethics a career detriment. The client’s best interest are easily disposed of and the broker has no say in the matter. Person ethics in the client’s best interest will prevail in a free market even if it means advisors must divorce themselves from the insular brokerage business model which only considers its self interest at the expense of the investor. This was not always the case but has become a problem of the past two decades to which the industry seems to have no recollection. A terrible deterioration of personal ethics.

Stephen Winks

Pete Giza

Pete Giza

December 10, 2015 — 1:54 AM


Paul Damon

Paul Damon

December 10, 2015 — 3:56 AM

Point taken, Brooke. My soul would certainly die a little each morning at 5:30am PT when the deluge of press releases that you likely receive begins. So many “innovative solutions” to sift through. I certainly hope to keep my clients consistently in the 'communicating and value camp’, be the product and/or message geared toward the advisory or institutional side.

Regarding DFA and ETFs though, they are effectively selling ETFs now via the deal with John Hancock, right?


And RIAs are a/the primary buyer of ETFs, known for their typically lower costs and greater transparency, so why the negative connotation regarding getting into the ETF game other than the firm’s heritage. Their exclusivity, which I’ve been fascinated by, could be viewed as quite a marketing ploy in itself (maybe not insulting insomuch as custodians’ penchant for opacity); from what I read and hear, it seems DFA-approved RIAs allocate the (vast) majority of their client portfolios to Austin. Such loyalty is the golden ticket for any asset manager. Perhaps DFA being more accessible via the new factor index-linked subadvised ETFs is actually a win for RIAs — either for those intelligent enough advisors who can’t get down to Austin for the weekend because they’re too busy with soccer duty and/or who want to maintain more of an open architecture platform to place their clients in the products that best serve them, be they tilted towards factors with a discretionary component or patterned on a rules-based index, tracking traditional market cap weighted indexes or even good ol’ active managers looking to best benchmarks in good times and minimize downside capture in the bad (for the right cost, of course).

brooke southall

brooke southall

December 10, 2015 — 4:49 AM


Excellent thoughts on DFA.

My point was not that Hancock ETFs with DFA are bad. They are likely good for the reasons you point out.

But I think DFA could have had a field day in the ETF business i.e. lots of assets, had it chosen to go that route on its own. It chose not to. I picked that out as a case of it doing the opposite of what Wall Street would have done.

Still, I get your further point that DFA’s actions are its own form of self-interested marketing, though 'ploy’ is a bit strong. That would be a good topic for discussion!

I was expecting when I callously attacked a mostly good industry and praised a few less-than-perfect companies, and left out other deserving ones [for lack of space and brainpower] that I’d get a few good chidings.

Yes, I’ve always respected your approach to PR, too.



Stephen Winks

Stephen Winks

December 10, 2015 — 11:54 PM

Pete Giza,

You might agree that the personal ethics and integridity of the advisor, which is so important to the consumer, is thwarted by brokerage industry compliance protocol which opposes the broker acting in the client’s best interest as defined by statute of all those who render advice. Thus I understand your Huh comment. Clearly from a brokerage perspective you sees no problem with 40% of the earnings on your client’s retirement savings being lost to brokerage commissions, fees and administrative cost as found by the White House Council of Economic Advisors. Your confusion can be excused as your simply turning a blind eye to things you can not control. Yet the point is the brokerage compliance protocol should protect the best interests of the investing public not the industry’s conflicted self serving interest.
Stephen Winks

Pete Giza

Pete Giza

December 12, 2015 — 12:58 AM

Stephen Winks,

The “huh?” was directed at the article, not your comments.


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