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Beyond Independent

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On the Right Side of the Way Things Work.

A blog about moving beyond independence for financial advisors

Posts Tagged ‘Series 7’

RIAs No Longer Alone…FINRA Really Wants to Join Your Business
Monday, March 28th, 2011  |  Filed Under: Going Independent, Legislation

The Financial Industry Regulatory Authority (FINRA) announced last week that it has hired Michael Oxley, one of the authors of Sarbanes-Oxley regulation to lobby on its behalf to be the self regulatory organization to oversee the RIA business. This strategy is definitely representative of the broker-dealer SRO’s interest in ensuring it maintains a key position in regulating RIAs. One might also make the case that Finra is pulling out all the stops to ensure they have control over the fastest growing segment of the advice business, RIAs. As more and more advisors shift their business from commissions to fees, the greater the probability that they transition completely to the advice model, leaving behind broker-dealers and Finra regulation.

So, is this move by Finra self preservation or in the best interest of the industry? This remains to be seen, but if you’ve kept up with this topic at all, you understand (but may not agree with) that it is highly likely that more regulation and review will be coming to the RIA business model. Finra has developed the examination process for broker-dealers and some of this infrastructure and experience could be used to exam RIAs. The SEC has admitted it lacks the resources and with budget battles, is not likely to experience an increase in funding needed to properly oversee all RIAs. The state agencies overseeing RIAs are cash strapped as well, so there’s only a remote chance that they would be the sole oversight organizations. Don’t expect this to be resolved anytime soon. There’s lots of lobbying and debating yet to occur on Capital Hill and within the advisor community. Bottomline, there will be more oversight in the future. If you have a view about regulation, now is the time to offer it to your senators and congress before we end up with some like Sarbanes-Oxley for RIAs.

For a link to a recent Investment News article about this topic click here. More.

Are You “Outgrowing” Your Broker-dealer?
Friday, September 10th, 2010  |  Filed Under: Custodians, Going Independent, Practice Management

As more advisors consider the benefits of going completely independent, the decision to leave behind the coveted Series 7 and associated commission income is a tough one to figure out. But, some advisors are choosing to go the RIA only direction because of the complications of maintaining a securities license and affiliation with a brokerage firm when primarily positioned as an fee based advisor.  More advisors are sitting down with the “T Chart”, determining the pluses and minuses to maintaining their Series 7, and whether there remains value in the traditional brokerage model. Among the issues are:

1. Is the compliance disparity getting in the way of doing business properly for your clients?

2. Are there services that you no longer need that you are paying your brokerage firm for?

3. Does the brokerage firm have a true interest in seeing that you are successful as a fiduciary advisor to your clients, or do they approach this aspect of your business in the same manner as if you were involved in a variable annuity or mutual fund transaction?

4. Are you able to offer the most appropriate services and products, or do you sometimes sacrifice to make the relationship work for your brokerage firm?

5. Is there value that the brokerage firm provides beyond what would be available through custodians, and other service providers that are specialists in the fee based business?  

While these issues all come down to a personal decision, as the industry continues its move toward fees, a greater share of advisors are saying they no longer need the traditional support of a brokerage firm.  This recent article cites a few examples of advisors that moved without their 7’s.