Enjoy the current installment of “weekend reading for financial planners” – this week’s edition kicks off with the big announcement that FPA National has dissolved its affiliation agreement with its New York chapter and spun up a new alternative FPA chapter entity in its stead, in what started out as a dispute about whether certain local chapter board members were inappropriately using lists of consumer contacts from the chapter’s public awareness events to prospect for clients, but has now turned into concerns about whether FPA National is taking too much control of its independent chapter entities.
Also in the news this week is a look at how state efforts on fiduciary standards appear to be slowing (now that the Department of Labor’s fiduciary rule is in limbo, and the SEC is expected to propose their own in the coming months), the announcement of a class action lawsuit against Edward Jones alleging that the firm was too aggressive in shifting clients out of commission-based accounts and into fee-based advisory accounts (compounded by the fact that those advisory accounts may have been investing into Edward Jones’ own proprietary products), and a discussion of some of the talking points that other advisors are using when talking clients through the recent market volatility.
From there, we have several practice management articles this week, including: a review of advisor compensation (and the rising impact of the young-advisor talent shortage) from the latest Schwab and Fidelity benchmarking surveys; tips on how to properly structure partner compensation (broken into base compensation, incentives, and profit distributions) for firms that must transition into more formal partner roles given their growth; how employee turnover can cause poor performance (and how to get control of a turnover problem with clearer definitions of the work, the worker, and the workplace); why advisory firms should be more specific about their vision, mission, and strategy, to avoid what sound like “phony” slogans; and a hard look at the consequences of taking “too much” cash out of your advisory firm instead of reinvesting for growth.
We wrap up with three interesting articles, all looking at the changing landscape of broker-dealers in an increasingly fiduciary future: the first is a review of the latest 2018 Financial Advisor magazine broker-dealer survey, with interviews from most of the leading B/D executives who themselves note that the entire broker-dealer model is going through a big “rethink” for the future; the second looks at how broker-dealers need to re-engineer their technology for managing broker commissions into a more holistic “advisor compensation management” platform that provides business intelligence and workflow support as well; and the last explores how, ironically, it was the independent broker-dealer movement that really helped financial planning to first gain traction 20-30 years ago, even as it’s now the fiduciary financial planning movement that is forcing broker-dealers to reinvent entirely in order to survive (or, alternatively, to simply become giant national RIAs instead!?)!
Enjoy the “light” reading!