Offering refunds on managed-account fees when portfolios lose value grabbed readers' attention this week in the wake of news that TD Ameritrade Inc.'s retail advisory service had gotten the green light to pursue this approach. The hot-button issue drew strong reactions, though it wasn't the first to take this step. The week also saw some high-level reorganization at Morgan Stanley, a huge ruling against a former LPL Financial broker and new insights on the most tax-friendly states for retirees.
Trevor Hunnicutt broke the news that TD Ameritrade's retail advisory arm would offer fee rebates to new clients of its Amerivest managed-accounts service if their investments saw negative returns in two straight quarters. The news stoked much debate in the comments section, as "JGuild" claimed this practice "opens the door for all sorts of portfolio manipulation," so the firm could hypothetically avoid handing out refunds. TD also isn't the first firm to dabble in customer refunds, as Charles Schwab Corp. announced in December that their clients could request refunds.
Morgan Stanley's management saw some notable departures last month as the firm aims to boost earnings by focusing on efficiency. According to Mason Braswell's piece, many of the departures were tenured managers who had ties to Smith Barney, and the highest-profile personnel left the firm's consulting group.
Blake B. Richards, formerly of LPL Financial, has been ordered to pay nearly $2 million in disgorgement and penalties. How did this broker behave badly? He allegedly misappropriated $1.7 million from investors, some of whom were elderly. These were clients' retirement savings or life insurance proceeds from deceased spouses, according to the SEC.
A valuable new resource for clients facing retirement: this ranking of the 10 states that have the best tax structures for retirees. The states are ranked based on 10 tax categories, including seven types of income tax; sales tax; real estate tax; and estate, inheritance and gift taxes.