Category Archives: Broker-Dealers

Mark’s thoughts on developments and trends in the broker-dealer industry.

Fiduciary Implications

The initial reaction to the DOL Fiduciary Rule was mixed, now we are beginning to see some Fiduciary Implications. Big players are already making moves to ease compliance, most notably Charles Schwab, and the speed with which this is happening means some benefits may quickly accrue.

So, what have been the fiduciary implications thus far, and what might follow?
The absolute most encouraging fiduciary implications I saw all week was this news about Schwab dropping loaded funds.  Post-DOL fiduciary rule, Schwab dumps load funds as advisors yawn That’s good news because it indicates the market moving to help you with your quest for lower cost investments, and Schwab moving means others will have to follow, despite what they may say.
Inasmuch as the fiduciary implications are technically limited to qualified investments, i.e. your tax favored investments like 401(k) and IRA assets, theoretically only a fraction of your investments are ‘protected’ by the new fiduciary rule. Still, I think once the smart players go to the effort of compliance with the DOL fiduciary rule, they will go ahead and apply it themselves to non-qualified money. Mind you, the SEC is talking about its own fiduciary rule for non-qualified money, and there will be plenty of resistance from the industry. SEC Joins Battle on Broker Bias That Could Remake Industry
Frankly, having a more uniform framework which applies across qualified and non-qualified money will be a better thing, certainly for investors, as the industry will be compelled to comply, limiting the chances of shutting out smaller investors. Keep in mind that the DOL rule makes it relatively easy to choose to walk away from small accounts – whether personal or business – as a rational business decision. Walking away entirely will be an entirely different equation.

Now that we have a glimpse at the fiduciary implications, let’s take a minute on world markets.
First, let’s consider some context for the prior remarks. This is a fascinating article about the future of the asset management industry. I pulled it first for the excellent bubble chart on invested funds. I put it here, though, because it gives you some insight into the industry dynamics. Asset Managers, Prepare to have Your Business Disrupted
You have read here before about the questionable US unemployment data. This article goes one step beyond to show you the US output gap as an alternative means of divining the true state of the economy. I found it fascinating. Why the US Output Gap Means the 10-year is Going Below 1%
I find it hard to internalize the rapid rise of China as an economic power. These few charts give a good primer on where things stand. These 4 maps show how China is dominating global trade
I admit I don’t agree with George Soros much, probably at my own peril. This time, though, he makes a good deal of sense. Soros says China looks ‘eerily’ like the US in the run up to the financial crisis
At the same time, Japan’s woes seem to worsen. In Shocking Finding, the Bank of Japan is Now a Top 10 Holder in 90% of Japanese Stocks

Now, you deserve to lighten up some.
As an adopted Minnesotan, I was surprisingly struck by the sudden loss of Prince. Here is a great link to his entire very last show. Listen to Prince’s Entire Final Concert
I know an inordinate number of people gather around for the Kentucky Derby. This may make it easier for you. The 13 Best Bourbons for Kentucky Derby Season 2016
When you hit the road this Summer, take along the best tools. The Best iPhone Apps for Travelers

Some thoughts on leadership and its antithesis

Some thoughts on leadership and its antithesis
Plus: the challenge facing broker/dealers…how to attract Millenials

Leadership, or not:
How CEOs can use personal and corporate values to drive revenue, seemingly counter intuitively 4 ways purpose-driven CEOs can align purpose with revenue
A cheat sheet to being ‘exceptional.’ Think about it, it’s what you wanted. 10 Things Only Exceptional Bosses Give Their Employees
Does salty language really help? A telling infographic on how stress changed CEO behavior F-Bombs Tolerated in Recession Cause CEOs Trouble Later
I could not resist, can someone explain how this makes sense, even remotely? Report: Chelsea Clinton earns up to $75K per speech NY Times Columnist Slams Chelsea’s Buckraking for ‘The Rapacious, Gaping Maw of Clinton, Inc.’

The Millenial Challenge:
Decipher their needs and wants, then adapt US financial advisers try to win over wary Millenials
Leverage what works with them to get their attention The Science Behind Reaching Millenials (Infographic)

Some Weekly Diversions:
How to optimize your next shopping spree 16 Tips Every Amazon Addict Should Know
Beware the headbanging rock of your youth (perhaps?) 5 most incredible discoveries of the week
Seems there is an infinite supply of crazy, old picture sites, but still they always have something interesting in them Curiosities: Amazing Historical Pictures

Finding Your Ideal Financial Advisor

Finding your ideal financial advisor is definitely worth the effort, and should not be difficult. This is so important because your retirement security and personal financial well-being is dependent upon things that you do. That’s right, the Government, Federal and otherwise, will not take care of you, at least not to your liking. You need to take personal accountability for your fiscal health. I think you should consider five things most relevant in finding your ideal financial advisor: comprehensive perspective, self-awareness, qualifications, independence, and compensation.

Most importantly, your ideal financial advisor must take a comprehensive view, considering all your assets and risks, including retirement plans and money held outside their firm, and address protection needs, like life insurance, longevity risk, even intelligently selected property insurance coverage. Anyone who does not consider all these things is simply not an ideal financial advisor.

Your ideal financial advisor must also have a high degree of self-awareness, recognizing their own strengths and weaknesses. That usually means having a team of associates qualified to help with specialized areas like estate and tax planning.

When selecting your ideal financial advisor, qualifications are also important. Getting a referral is always a good start, and you certainly want someone who professes to take a holistic view. Someone who truly does craft personalized financial plans. Experience is generally a good indicator, too, as are certifications, like a CFP designation. Beyond this, here are some resources you can look to online, FINRA’s BrokerCheck ( and the CFP Board website (

I also encourage you to find an independent advisor, but caution that it is not essential. What I mean by independent is that your advisor unaffiliated with a “career” force, like the traditional insurance companies had – and some still do. The red flag is when your potential financial advisor self-describes as “an XYZ Company agent.” That is not, necessarily, a non-starter, but it should raise a red flag as they may be constrained in the product selection they can offer, a so-called “closed system.” Simply stated, your “XYZ Company agent” might only sell “XYZ Company” products. Just ask if they have such constraints, then decide. Even in closed systems, the products may be competitive, and the training and support they receive may more than offset the downside.

Finally, there is the matter of compensation. Have a frank discussion with your prospective financial advisor about their compensation. It may seem appealing to pay a flat fee or even a percentage of your account value, but do not forget that many financial products have compensation elements such as time-of-sale and trail commissions. Ideally, your advisor will present you with a full accounting of their compensation, so you can both make educated choices. Fee based advice and no-load products are a great combination, just unlikely that every product you need will be available on a no-load basis. Be educated and open about compensation, and you should be fine.

Follow these five steps, and you should be on your way to finding your ideal financial advisor.