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The INsiderblog

InvestmentNews reporters offer their take on intriguing or controversial articles from around the web.

Sep 12, 2014

Nontraded REIT guidelines too late for some clients

By Bruce Kelly

State securities regulators are making noise about implementing changes to policies that would limit how much a client's net worth could be invested in nontraded real estate investment trusts.As my colleague Mark Schoeff Jr. recently reported, the North American Securities Administrators Association Inc. has been circulating to industry regulators and representatives a list of 33 proposed changes to its REIT policy, with the intent to better protect investors. One of the recommendations on the list focuses on how much of a client's net worth can be allocated to nontraded REITs. And it's no wonder. Such REITs are in regulators' sights because of questions about their fees, transparency and performance during the credit crisis. Some registered reps who sold illiquid REITs before the real estate collapse of 2007 and 2008 have vowed never again to touch the product. Some of the most notable REITs of that era saw dividends slashed and... Read full post

Aug 8, 2014

Why more graduates aren't sitting for the CFP mark

By Liz Skinner

The CFP Board of Standards Inc. is digging around to try and figure out why many financial planning program graduates don't go on to attain the certified financial planner mark. Early results are telling.A recent study showed that 69%, or 351 out of 506 graduates, had not taken the two-day comprehensive exam in the five years since they had completed their bachelor's or master's degree in financial planning. Hoping to enhance the pathway to the designation it grants, the CFP Board over the past two months had researchers sit down with graduates of five different financial planning programs and ask them what they've been up to since graduating up to six years ago.Of the 16 graduates interviewed, six had secured the mark, three had passed the exam but were still working on completing the two to three years of work experience needed before the board awards the certification, four planned to take the exam in the future and three said they... Read full post

Jul 23, 2014

Survey results draw a picture of tech-savvy advisers

By Joyce Hanson

There's a dog-eared copy of last year's copy of InvestmentNews' “most popular tech products” survey sitting on my desk, and it's finally time to retire it. The 2014 Technology Usage and Satisfaction Survey is in — all shiny and new and full of useful information. It publishes Monday, but I can give you a sneak peek.In taking a closer look at the rich data that respondents submitted, I came away with a picture of a typical tech-savvy adopter/buyer/user in the adviser space. That adviser is more likely to be an independent registered investment adviser than a registered rep at a broker-dealer. Assets under management range from $10 million to $99.9 million. The primary custodian is most likely to be Schwab Advisor Services or Pershing Advisor Solutions, and the top products used are Redtail Technologies Inc.'s customer relationship management platform, MoneyGuidePro's financial-planning system and Albridge Wealth... Read full post

Jul 16, 2014

Liquidity events heating up REIT market this summer

By Bruce Kelly

Liquidity events of nontraded real estate investment trusts are heating up during the dog days of summer. This month already has seen one liquidity event — meaning a merger or a listing on an exchange; while a significant nontraded health care REIT is reportedly in talks to be acquired.July has also witnessed the announcement of an acquisition of a traded REIT that was composed of former nontraded REITs and a spinoff of a nontraded REIT asset manager from its traded REIT parent. The flurry in activity comes after the first half of the year saw only two liquidity events: the listings in April of the $2 billion American Realty Capital Healthcare Trust Inc. on Nasdaq and the $1.9 billion American Realty Capital New York Recovery REIT Inc., which changed its name to New York REIT Inc., on the New York Stock Exchange.In June, a giant health care REIT, Ventas Inc., said it agreed to acquire the ARC Healthcare Trust for $2.6 billion in... Read full post

Jul 3, 2014

Even decades of legal protection don't create diversity

By Liz Skinner

Fifty years after the Civil Rights Act mandated equality under the law, the ethnic diversity of the nation's financial advisory business pales in comparison to the demographics of the population. About 64% of Americans are white, according to the 2010 Census; about 92% of advisers are white, according to the Securities Industry and Financial Markets Association. Some might argue that the population of wealth managers is white because that's where the wealth resides. But even on that measure, the proportion of minority advisers lags wealth demographics. Non-white Americans hold 12% of the wealth in this country, according to a Demos analysis of Federal Reserve data. Only 8% of advisers are ethnic minorities — and in most firms it's likely less.Few of the major financial firms break down their adviser populations by ethnicity. One that has been more visible is Edward Jones, and it estimates that it has about 6% minority advisers... Read full post

Jun 27, 2014

Brokers unable to escape their past

By Mason Braswell

As Finra looks to boost awareness of its database of brokers' records, more advisers may find themselves revisiting some of their lives' more dubious moments. In addition to a broker's employment history and any customer complaints, the Financial Industry Regulatory Authority Inc.'s database is full of youthful indiscretions from the classic fraternity prank gone awry to shoplifting and drag racing. Even though they may not be investment-related, they must still be disclosed.While those indiscretions may go under the radar now, several Finra efforts, including a proposal to require brokers to include a link to the database on all online marketing materials and social media, may bring some skeletons out of the closet. There's the case of the broker who stole a cheeseburger to get into his fraternity, another who got on a train without paying and several who wound up in handcuffs trying to impress their girlfriends. (Here are 12... Read full post

Jun 23, 2014

Good work: Finra employees make double industry pay

By Bruce Kelly

If I return to this world in a future life, I will make sure to come back as a regulator with the Financial Industry Regulatory Authority Inc. That's kind of sad, because when I was a kid all I wanted was to grow up and play second base for the New York Mets. But the pay and benefits at Finra, the securities industry's self-regulatory organization, are so lofty that it makes the dreams of youth well worth deferring. Indeed, the average Finra employee does far better in terms of compensation and benefits than someone who works in the securities industry, which I cover for InvestmentNews. According to Finra's 2013 annual report, which was issued last Friday, the average compensation and salary for the 3,400 Finra employees last year was $197,000, excluding certain severance and pension costs. That's pretty sweet, particularly as it practically doubles the mean wage earned at all 167 occupation titles listed in the 2013 “Securities... Read full post

Jun 17, 2014

Do Merrill Lynch's new business cards diss the brand?

By Mason Braswell

It's been more than five years since Bank of America Corp. acquired Merrill Lynch & Co. Inc., but some of the firm's “thundering herd” of brokers still jump at the threat of any changes to the Merrill Lynch name. A new tweak to Merrill Lynch advisers' business cards earlier this year was all it took to cause a stir among some brand loyalists among the firm's approximately 13,700 advisers.Several current and former Merrill Lynch brokers and industry recruiters pointed to two key changes: the shrinking of the iconic Merrill Lynch bull on the front of the cards and the addition of a red and blue strip at the bottom symbolizing Bank of America's two-tone flag. “Not only are the colors of the bank's flag at the bottom (front) of the card, but the Merrill Lynch bull is getting smaller,” said one veteran Merrill Lynch adviser, who is based in New England and had been with the firm since before the Bank of America... Read full post

Jun 6, 2014

Living online is changing our brains

By Joyce Hanson

All the technological advances being reported at Pershing's INSITE conference this week are exciting. Interconnectivity, rapid communication, intuitive computers that talk to each other, mobile devices everywhere and other digital wonders — it's hard not to be impressed.But as I roamed around the conference's session rooms and exhibition spaces, I couldn't deny my sneaking suspicion that all this technological change is happening so fast that my brain just can't keep up.As it turns out, there's science to back up my suspicion.In one of the final INSITE presentations on Friday, neuroscientist Baroness Susan Greenfield (yes, that's right, she's a British baroness and a member of the House of Lords), told a room packed full of financial advisers that living online is changing our brains — and it's not all for the better.The fact is, technology is changing the world so quickly that it can be difficult to slow down enough to... Read full post

May 30, 2014

John Thomas Financial lives on - on Twitter

By Mason Braswell

The Financial Industry Regulatory Authority Inc. expelled John Thomas Financial on Halloween last year, but the ghost of the broker-dealer lives on — at least on Twitter. The defunct firm, which Finra accused of fraud last year, operates under the handle @JohnThomasBD, tweeting once a day, to about 150 followers. The tweets tag financial media outlets and advertise a daily newsletter that the firm puts out with fresh content from around the web. On Thursday, the newsletter featured stories from other news outlets on Maya Angelou, Edward Snowden and Apple Inc.'s purchase of Beats Electronics. The heading still maintains the firm is a full-service broker-dealer member of Finra, the Securities Investor Protection Corp. and Nasdaq. “John Thomas Financial is a full-service brokerage company started with the aim of assisting investors encounter the increasingly difficult choices,” the newsletter's heading reads. The... Read full post

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