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The INsiderblog

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

Apr 25, 2014

Must you, should you, pay your interns?

By Liz Skinner

Firms offering unpaid internships this summer may be standing in murky waters. Several unpaid interns have sued large companies such as 21st Century Fox and Viacom Inc. in cases that are winding their way through federal courts. Also, some cities like New York and states including California and Oregon have moved in the past year to boost protections for all interns. “We encourage advisers to avoid potential problems and pay people, and it's not just a legal thing,” said Jon Yankee, principal at Fox Joss & Yankee. “If they are good-quality people, they deserve to be paid and to be given a good experience.” Mr. Yankee, whose firm published a white paper on adviser internships in 2011, said he thinks most advisory firms are paying their interns. He said more college students are expecting to get paid, in part because schools are teaching them that their time is valuable. “We have always paid interns for... Read full post

Apr 24, 2014

Women CFPs satisfied with careers, but bias remains rampant

By Darla Mercado

Gender bias is alive and well in the financial advisory industry, and though eliminating it will be a monumental effort, everyone can play a role to ensure that aspiring women advisers thrive. The Certified Financial Planner Board of Standards' Women's Initiative held a seminar in New York City on Tuesday morning at which new research was discussed that brings to light the hurdles that continue to plague female financial advisers. Though 72% of women with the CFP certification are satisfied with their careers, based on a survey of 262 female CFPs by Fondulas Strategic Research, the qualitative research shows that women face biases and discrimination at the workplace. The FSR survey shows that only 29% of the 975 women surveyed (including female financial professionals and those aligned with college programs in this space) agree that “the office culture in financial firms makes women financial planners feel welcome and respected.... Read full post

Apr 17, 2014

Tax lessons learned for the 2013 season

By Darla Mercado

I spent a good part of 2013 and early 2014 warning financial advisers about higher taxes that were just around the corner for their clients due to the American Taxpayer Relief Act of 2012. But I never anticipated I'd be writing Uncle Sam a four-figure check. Ouch. The exact amount on my husband and I owed for federal taxes was $4,175. That's decent-vacation-in-Europe money. Or new-pair-of-fancy-roadbikes money. The best alternative? We could've just left that money where it was originally: sitting in our emergency fund savings account. For those of you who missed all the stories I wrote last year and through the first few months of 2014, here's a quick recap on ATRA: Single filers with taxable income over $400,000 and married-filing-jointly filers with taxable income over $450,000 will be subject to a top marginal income tax rate of 39.6%, plus a top marginal tax rate of 20% on long-term capital gains. Starting at the $250,000... Read full post

Apr 7, 2014

A visit to the cool and wearable future

By Joyce Hanson

I have been to the future and back, and I can report that it is cool, wearable and full of Wi-Fi-enabled screens of all sizes.On Friday, I traveled to Fidelity Institutional's Office of the Future, in Smithfield, R.I., which will officially open to advisers this spring, and got a sneak peek of how the latest technology can facilitate the adviser-client relationship. I also ventured into the firm's Boston headquarters for a tour of Fidelity Labs.Here's what I learned: Computer hardware is disappearing from view as data moves into the cloud. Software now functions increasingly as a web-based service. Business can be conducted anywhere, anytime, as long as people have access to personal computers, laptops, tablets, smartphones — and even smartwatches and other wearable technology.When I say that the future is cool, I'm comparing it with the 1960s, when Fidelity and other companies designed their first mainframe computers —... Read full post

Apr 3, 2014

'User experience' top of mind
at TechLeaders conference

By Joyce Hanson

Here's the first thing a financial adviser needs to know about the TechLeaders conference: The annual broker-dealer technology meet-up is all about how to serve the needs of advisers, yet few advisers actually attend.Instead, the 100 or so broker-dealer professionals who attended the TechLeaders conference just outside Dallas Monday through Wednesday carry titles such as head of information technology, director of operations and chief compliance officer. And yet the event was all about the adviser. These professionals were there to talk with peers about industry trends, meet vendors and come away armed with new ideas on how to best spend their tech budgets on products that help the men and women on the front lines.So what trends were top of mind at TechLeaders 2014?One big focus was the delivery of a “user experience” that makes advisers and their clients feel comfortable when working on their mobile devices.For example,... Read full post

Apr 3, 2014

Finra complaint highlights epidemic of abused trust

By Darla Mercado

Though brokers and advisers may find themselves scowling over regulators' decision to crank up the heat on rollover activity, a recent Finra complaint against a pair of brokers shows that the attention is far from unwarranted. The “plan fiduciary versus non-fiduciary” discussion is a favorite here at InvestmentNews and in the financial advisory community. It's an even bigger deal now that the Financial Industry Regulatory Authority Inc., the Securities and Exchange Commission and the Labor Department have IRA rollover activity in their crosshairs. But that's a nuance that's often missed by clients and prospects, especially the masses of employees who are saving for retirement and whose only contact with a financial professional might be around enrollment time. To those workers, that financial professional, regardless of how he is paid, is expected to be trustworthy and knowledgeable. “You [the broker or adviser] were... Read full post

Mar 28, 2014

Independent B-Ds eager to see more M&A activity as Schorsch takes breather

By Bruce Kelly

Even though nontraded-REIT czar Nicholas Schorsch appears to have taken a breather in his march to buy up independent broker-dealers, that doesn't mean that others in the industry aren't eager to see more deals get done. Indeed, one of the largest shareholders of publicly traded National Holdings Corp. this month sent a letter to chief executive Mark Klein, urging him to seize the moment for potential mergers and acquisitions or otherwise maximize value for the company's shareholders. Mr. Schorsch, through his publicly traded broker-dealer RCS Capital Corp., of late has been on an acquisition binge of independent firms, announcing five such deals since last June. One of those deals has closed, while others are pending.In total, they involve close to 9,000 reps and advisers. On consecutive days in January, Mr. Schorsch said that he was buying Cetera Financial Group for $1.15 billion and J.P Turner & Co. for $27 million. He has been... Read full post

Mar 18, 2014

Finra freezes new arbitration cases in Puerto Rico

By Bruce Kelly

Even though Puerto Rico's beaten-up municipal bond market improved last week, beleaguered bondholders have swamped Finra's arbitration system with 200 lawsuits, forcing the regulator to delay cases until it can find additional arbitrators.The Financial Industry Regulatory Authority Inc.'s Dispute Resolution unit informed plaintiff's attorneys of the delay last week.“Finra can't handle the flood of Puerto Rico cases with such a small pool of arbitrators,” said Andrew Stoltmann, a plaintiff's attorney. Puerto Rico's municipal bond market has been struggling since last summer when Detroit filed for bankruptcy, inciting investor fears for Puerto Rico's $70 billion in municipal debt and setting off a wave of claims against the broker-dealers that sold the bonds. The S&P Municipal Bond Puerto Rico Index is down 15.24% over the past 12 months.(Don't miss: UBS Puerto Rico faces 'Whopper' of a problem over muni bond funds)Finra is... Read full post

Mar 17, 2014

Schorsch's stock rising

By Bruce Kelly

Shares of RCS Capital Corp., the company that nontraded REIT czar Nicholas Schorsch is using to build an independent-broker-dealer empire, have doubled in the past three and a half months on above-average trading volumeRCAP shares hit new highs Monday afternoon, reaching $32.21 a share, up from $15.99 a share on Dec. 2. Although no one professes to know exactly why the stock price is soaring, a lot has happened to RCS since the start of December. Most notably, the company said in January that it intended to buy Cetera Financial Group for $1.15 billion. Since June, RCS and its related companies have closed or announced deals for five broker-dealer holding companies with close to 9,000 registered representatives and investment advisers. Indeed, the stock is making its move as the independent-broker-dealer marketplace wonders what is next for Mr. Schorsch. Although he has continued to add to RCS' offerings, most notably with the recent... Read full post

Mar 6, 2014

Closed doors at Finra hide the whole industry's shame

By Mason Braswell

Finra's second diversity conference in New York on Tuesday featured a number of key industry speakers who touted the importance of recruiting, retaining and promoting more women and minorities in the industry.“Diversity is strength — even a group of best point guards cannot win a basketball game,” former Bank of America Merrill Lynch executive Sallie Krawcheck said during a speech, according to a tweet from Finra's @Finra_Education handle. Sally Krawcheck @85Broads: "Diversity is strength - even a group of best point guards cannot win a basketball game." #FINRADiversitySummit— FINRA Education (@FINRA_Education) March 4, 2014But despite its important message, the event and speakers didn't make headlines. The conference was closed to the media in a decision that shows that the industry still isn't capable of having the conversations and making the disclosures necessary to tackle its diversity problem.... Read full post

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