Financial Advisor, Series 7, Registered representative, Stockbroker, Branch Office Manager, OSJ manager, Regional manager, National product manager, Financial Planner, Registered Investment Adviser, Investment advisor representative, or Hedge Fund Manager / Promoter and unlicensed securities individuals and firms
Over 35 years experience analyzing compensation and revenues including dealer concessions, re-allowances, retention bonus agreements, retention awards, forgivable loans (beginning in 1983), recruiting bonuses, training bonuses, trainee compensation, book of business, trailing twelve months (TTM) of (qualifying) gross production, qualifying accounts, commissions, fees, salaries, bonuses, production overrides, product revenues, profitability, productivity for financial advisors, stockbrokers, product wholesalers, product managers, traders, trading desk profit, financial planner or registered investment advisers’ commissions, fees, expense, customer account applications and agreements and compensation plans including cash, deferred, bonus, options, restricted stock awards, recognition awards (such as Chairman’s, President’s club and titles such as managing director (MD) or senior vice president (SVP) of investments) and FA expense reimbursement programs.
Some financial services industry compensation – related cases may involve potential bias related to gender, race, age, ethnicity, seniority, training or titles, job promotions, lost opportunity, prized office space, extra or withheld sales assistants’ support, account distribution, disparate recognition, T&E business development and expense reimbusements, perks or sexual harassment including potential negative FA, branch and or firm P&L allocation, expenses, costs and economic impact.
In FIDUCIARY ACCOUNTS a Fiduciary Account Commission Expense Audit™ (FACE Audit™), commission, fee-based account and expense audit is among the best ways a trustee or fiduciary or any investor for that matter can spot potential cost savings, potential negative fiduciary compliance exposure issues and satisfy their personal fiduciary duty owed all beneficiaries of the fiduciary account(s). In addition to analyzing fees, expenses and commissions; a terms of service audit may reveal an inappropriate relationship for trust and fiduciary accounts, which, if there may be an existing problem or one down the road could prove challenging for trustees to overcome in court or arbitation. Trustees need to be exceedingly careful by reading and understanding prior to (and on an ongoing periodic basis) agreeing to any and all account agreements and or terms of service and or any updates changes or amendments thereto. And must me especially careful and diligent upon any changes to the FA or group of FA’s advising on accounts.
Customers often simply refer to their financial adviser as “my FA or my stockbroker or my broker” however, the stockbroker may also use certain titles and or official – looking designations such as Wealth Manager, Private Banker, Investment Executive, Account Executive, SVP, Senior Vice President of investments, MD (Managing Director), PM (Portfolio Manager), Financial Consultant (FC), Senior adviser, Retirement planning specialist (RPS), Financial planner, CIMA, CFP, CIMC, CFA, CAIA, AIF and hundreds of other myriad titles used in part, to impress a client. Several years ago the NASD issued a list of its approved designations. Today FINRA supervises the titles that may be used by securities registrants.
Titles come and go – and it’s important to distinguish between them.
Stockbroker compensation is usually based upon commissions, fees, assets under management although there are many other forms of compensation or incentives in the securities and financial services industry.
Commissions are usually based on a trade or transaction. Fees are usually based on the amount of assets in the customers’ account (or household) and are usually billed quarterly in advance. Fee-based accounts usually do not charge commissions per transactions, however in some situations an account may be charged both fees and commissions.
Managed accounts, also known as “Fee-based accounts” (also Managed Money or Investment Consulting Services accounts) began in the 1980’s at EF Hutton & Co. (like EFH Directs, Suggests programs). Mr McConnell performed analysis and accounting in the 1980’s comparing these accounts to many other brokerage firms’ fee-based accounts such as Merrill Lynch Suggests, Paine Webber Command, Prudential, Dean Witter soon copied these managed account programs. EF Hutton was acquired by Shearson after the 1987 Stock Market crash, then in 1993 Smith Barney acquired Shearson and became the leading provider of managed or fee-based customer accounts. In the late 2000’s Morgan Stanley acquired the Smith Barney private client group (i.e. sales force) also formerly known as Citigroup.
Divorces involving Financial Advisors or CFPs’ (Financial planners)
Marital property must be determined to be community and or separate property and valued accordingly. This includes book of business / client list inclusions and valuations with supporting schedules. In California IRMO Finby is an important case on these topics. However, the specific facts and circumstances, and the nuance and background of the financial services industry book of business engagements can upend opinions of values and interests proferred by business valuation experts. Since, they may lack the relevant direct, hands-on and requisite foundational knowledge, education, industry experience and or training causing them to overlook or gloss over the applicable multi-source compliance and regulatory environments and the changes thereto over the time periods in question among other crucial issues.
There are several fundamental reasons why some firms and FA’s dominate or lag behind fee-based overall or in certain customer account segments; which upon consultation we may point out to you.
For more information contact@fiduciaryexpert.com or (310) 943 – 6509
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