Advisers have the opportunity, until Nov. 20, to make their voices heard on the Financial Industry Regulatory Authority Inc.'s broad proposal to change how it regulates financial advisory firms' communications with the public — a proposal that could address advisers' use of social media.
Advisers have been both confused by, and often irritated with, how the regulatory body interprets many of the latest social networking tools such as
Twitter and LinkedIn.
The full request for comment is titled
Regulatory Notice 09-55 and outlines the proposed changes with explanation. It provides a mailing address and e-mail address for advisers who want to respond (the comments will eventually be made available to the public on the Finra website).
The new rules would replace current NASD Rules 2210 and 2211, the interpretive materials that follow NASD Rule 2210, and portions of Incorporated NYSE Rule 472.
Absent from the document are any specific references to social networking, social media, or specific applications or technologies, largely because Finra doesn't believe it's appropriate to make special rules for each new communication tool that becomes available.
"We are very interested in accommodating new technology, but the challenge is to have rules that are both specific enough to address current issues, but broad enough to accommodate evolving technologies and future developments,” Thomas Pappas, Finra's vice president and director of the advertising regulation department, told
InvestmentNews earlier this year.
Principia CAMS prices to increase — some advisers considering a move
Prices are going up for the venerable portfolio management system dbCAMS from Financial Computer Support Inc., renamed Principia CAMs by its new owner, Morningstar Inc.
The new flat base price will be $2,200 for the first seat plus $600 per additional seat according to an e-mail from Chris Boruff, president of adviser business for Morningstar. Some long-time users of the product claim this represents a 200% to 400% increase over what they currently pay.
Mr. Boruff wrote in the e-mail that after having spent the past year integrating the FCSI organization and reviewing the economics of the business, his organization had reached the conclusion that the old pricing structure was unnecessarily complex.
Much of this, he wrote, was because each major capability FCSI added over the years was treated as a new module and was charged for separately — rather than included as a feature of the core product. Further complicating matters, he added, was the wide range of prices advisers were paying for the product, which was largely the result of individually negotiated contracts.
Morningstar purchased FCSI last year.
In a recent interview, Mr. Boruff said that Morningstar currently had about 825 client firms using Principia CAMS, about the same number of firms that were using it at the time of acquisition.
While Morningstar is steering new customers to its
online Office offering the company has, and plans to continue, adding and integrating features to the older desktop CAMS product.
“Our intent is to support dbCAMs [Principia CAMS] indefinitely,” Mr. Boruff said.
Earlier this week, a number of advisers expressed irritation at the price increase and with the way they found out about it. Morningstar sales reps had contacted two advisers separately about renewing their contracts and those advisers then posted the information to an independent dbCAMS user bulletin board on Yahoo! Groups.
Mr. Boruff had a simple explanation for this approach.
“We've been addressing the price adjustment personally with each customer as they approach their annual renewal date, rather than through an impersonal mass communication to all customers at once,” he said.
Among the new integrations Mr. Boruff said had been made to the system are four new reports that integrate CAMS transactional level performance with Morningstar's proprietary analytics: account statements, portfolio overviews, investment comparisons, and security details.
In addition, Mr. Boruff said that CAMS users who have not subscribed to any Principia modules have benefited from inclusion of the Morningstar style box and Morningstar ratings, along with the new portfolio history and asset allocation summary reports.
LeGrand Redfield, president of Asset Management Group Inc., which manages $130 million in assets, was one of the advisers who had expressed some frustration with the situation and would be paying a significant increase given the changes.
“I have always been hesitant to change over our database system after so many years of working with dbCAMS, especially after I heard that Morningstar was buying them,” he said, adding that he just wasn't certain any new integration the company could propose would be worthwhile.
“I'm going to keep an open mind though until I've spoken my piece with them,” he said.
