Following 'irregularities' Mark Mandich says Curian Capital will close its doors in 2016

The numbers tell the story as an operating enterprise. Are TAMPS willing to create the necessary support infrastructure that make it safe for its advisors to acknowledge fiduciary duty and assume fiduciary liability. The TAMP model is not ideal in supporting fiduciary duty and the professional standing of the advisor. TAMPS literally must be in the investment business along side the broker/advisor and be prepared to bear fiduciary responsibility and liability. Curian and most TAMPS are not as well positioned as a specialized advisory services broker/dealer which is so good in its support of expert fiduciary standing, it can handle fiduciary liability. Note that Vanguard and most broker/dealers and investment product vendors do not support the DOL proposal that requires brokers to act in the best interests of the investing public when rendering advice on retirement assets (as required by statute). In order for TAMPS to seriously be in the advice business they must serve in an advisory role in concert with advisors offering individualized advice. TAMPS are simply not prepared to aid the advisor in fulfilling their fiduciary duty relative to objective, non-negotiable fiduciary criteria cited in statute. No TAMP executive expressing surprise understands what is required to support expert fiduciary standing nor are they prepared to accordingly assume fiduciary liability on individualized advice. The TAMP structure is not well suited to support fiduciary duty. Curian is just ahead of the game. What advisor would use a TAMP which can not support expert fiduciary standing and provide the advisor safety and professional standing.

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Stephen Winks.

Stephen knows nothing….

Why didn’t Jackson buy out Curian? NPH is leaving a ton of reps hanging loose and clients wounded as they strive for a new home. This is a huge blow!

As someone who used to work for Jackson, they could care less about their employees. This decision is not surprising. They let their employees go and gave them no indication something like this was happening – it was “full steam ahead,” until today. Meanwhile all the execs are collecting their bonuses. Horrible, horrible lying people run that company.

The management at Curian has failed their employees – generally very conscientious men and women Doing a difficult job – but more importantly they have failed advisors and their clients. Those advisors put their trust, and client dollars into Curian and now have to explain why the company they told their clients to trust their savings to yesterday is gone today. What a terrible crisis imposed by a terrible management team.

Look to the 'refund of certain fees’ for your answer. Compliance was never high on their list of priorities.

I take exception to earlier all-encompassing and rather condemning comments regarding TAMPS as a group. As one who is employed by a reputable TAMP, EQIS, and who also oversees its 401(k) program delivered through fee-based advisors, I would (and should) be out of a job if, as a TAMP, our firm were to be so cavalier as to view fiduciary oversight and compliance of being less than of paramount importance. I’m proud to say EQIS makes available to our advisors and their clients the option of us acting as a 3(38) fiduciary advisor in a program supported by strong relationships with top notch recordkeeping, custody, and trading partnerships. This is contrary to the TAMP picture that is being painted. I agree that a reputable TAMP platform should encompass the provision of strong back office support systems coupled with a truly fee transparent investment platform. Bottom line and in spite of Mr. Winks’ comments, EQIS fully understands the extent our fiduciary duties and we make sure those principles and responsibilities are carried forth by the advisors and firms with whom we work closely.

There is a big difference between TAMPS acting in a fiduciary capacity in managing money according to a specific generalized investment mandate and the advisor fulfilling all their personal fiduciary duties in providing expert individualized advice. It would not be wise for TAMPS to assume responsibility for every recommendation an advisor ever made, all TAMPS can do is act as an investment manager. The client relationship is with the advisor, not the TAMP, thus the TAMP is structurally out of the loop beyond their asset management role. The Brittish regulators have a different view of fiduciary duty as defined by statute than US regulators, which see no difference between brokers and advisors.

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Stephen Winks

Tom Cote,

If fiduciary duty is important to those who wish to act in an advisory capacity, the TAMP format by definition is limited in the role it plays in supporting the brokers accountability and ongoing fiduciary responsibilities on every recommendation the broker has ever made as clearly required by statute. Equis may be the only TAMP in the world that assumes fiduciary liability for an unlimited number of brokers/advisors, for an unlimited number of clients for every recommendation they have every made. This is the reason why advisors should vet each client before their being accepted, as fiduciary duty persists into perpetuity for future generations and requires succession management. Professional standing in advisory services is not best achieved in a TAMP format, private trust banks or specialized broker/dealers are ideal. The TAMP format only works with brokers whose firms do not allow the acknowledgement that advice is being rendered nor the broker’s assumption of fiduciary responsibility.

In five years, there will be a profound evolution in advisory services with in a brokerage format.

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Stephen Winks

Steve

I am going to chime in here a bit if you don’t mind. My observation is that the TAMP format can be useful both administratively and in a manner which supports fiduciary process/ protocol if applied properly. The issues we have seen is that they are not applied properly- more specifically the fiduciary continuum calls for:

An investment policy statement outlining the blue print (risk tolerances, allowable securities, accountability etc.) of the asset pool. TAMP use 'proposal generators’ which are totally inadequate.

Independent/ unbiased investment research across capital markets/asset allocation and investment strategy research- which is based on sound academically vetted practices, documented and defendable. Some TAMPs do most don’t

No 'manager up charge’ – you cannot get paid in any way/shape or form from the underlying investment managers- for example as some TAMPS do- you cannot negotiate a fee with a manager and tack on an additional 5- 10 bps. Total no no

Implementation- has to be done in accordance with the investment policy statement- allowable assets, restrictions, risk tolerances, rebalancing etc. As most TAMPs don’t start with an IPS they don’t implement according to it.

Transactions- trades done on behalf of the underlying investment manager should be done in real time- not batched and done the next morning. There are a lot of implications when this not done in real time. Trading should be based on best execution and measured (in order to be defendable) by qualified 3rd parties. Obviously- no clipping commissions!

Disclosures- all fees should be disclosed including program costs, explicit and imbedded (mutual funds) manager costs, research costs etc.

So- in my observation- the problem is not the TAMP format- it is the way it is implemented and for many the business model which has been built around it. In order TAMPs to support fiduciary standards they would need to change their technology (IPS vs proposal generator), trading (real time, multi currency) and business model. That’s why we created FAA.

Winks makes good points, and what with the new fiduciary rules coming down, we all better be watching our backs.
Who or what is FAA?

www.faadvocates.com