RIA Biz is reporting Goldman Sachs Group Inc. has been shopping around an ownership interest in Focus Financial Partners, LLC (“Focus”) currently held by Summit Partners, LP (“Summit Partners”).  RIA Biz gathered much of its information from an article on Financial Advisor magazine’s website and speaking to unnamed sources.  The article says that Focus currently has $45 billion of assets under advisement, administration and management through their partner firms. The article further reports that three private-equity firms have expressed strong interest in acquiring Focus and have signed non-disclosure agreements.

The article provides details on Focus’ financials, including that Focus has $175 million in debt and $80 million in preferred stock, while the earnings of the firm are about $40 million, with $22 million of cash flow that goes to Focus, while the other $18 million goes to the partner firms.  The article provides additional detail about Focus’ financials, including how a deal may impact partner firms.

Both Summit Partners and Focus declined to comment.

In an article posted June 6, 1012 on the Financial Planning.com website, a survey conducted by John Hancock indicated that investors now trust their advisor more then any other institutional professional, including doctors or accountants.  The survey, conducted in 2012, found that of the 1,005 investors surveyed 84% reporting they “strongly trust” their advisor.  Doctors came in at 79% and accountants at 74%.

The 2 highest contributing factors to this advisor trust were clear investment recommendations and and being knowledgeable and timely around markets and investment products.

According to an article posted on the Financial Advisor Magazine website on June 7, 2012, Mark Tibergien gave a speech at the Pershing Insite conference where he said that the older generation of advisors appear to be “burning out” the younger generation of advisors.  Among the next generation of advisors, the quit rate is rising at dramatic rates.  Tibergien estimates that the number of next generation advisors leaving the business all together is 23%.  This number should cause current owners of advisory firms to be concerned, as this potentially leaves a big succession planning gap.  It is estimated that 12,000 to 16,000 advisors and brokers will begin to retire every year over the next decade.  Based on these numbers, Tibergien estimates that the industry will need approximately 237,000 new investment advisors to enter the industry over the next decade.  It is currently estimated that 21% of advisors in the industry today are under 40 years of age, 5% under 30.

RIABiz is reporting that Bernie Clark (vice president of Schwab Advisory Services) and Skip Schweiss (managing director of advisory advocacy and industry affairs at TD Ameritrade) will go to Capitol Hill next week to meet with Congressional staffers regarding the SRO bill.  The details of who Clark will meet with are still being finalized, but Schweiss meet with Representatives Spencer Bachus and Carolyn McCarthy (the co-sponsors of the bill) and Representative Barney Frank. Representative Frank is the House Financial Services Committee’s ranking minority member.

Clark and Schweiss are also encouraging advisers not only to email members of Congress regarding their opposition to the bill, but also tweet about it.

RIABiz is reporting that the Project on Government Oversight (“POGO”), a non-profit government watchdog group, sent a “damning letter” to the House Financial Services Committee urging Congress to reject Bachus’ SRO bill.

The letter specifically attacked FINRA, saying “FINRA’s regulatory effectiveness is undermined by its inherent conflicts of interest, its lack of transparency and accountability, its lobbying expenditures, and its executive compensation packages, among other issues.”

A spokesperson for FINRA responded that “POGO’s position is not an acceptable or realistic response to the critical need to fill an untenable gap in investor protection in the investment adviser space.”

This is not the first time POGO has been critical of FINRA; the article reports there are 40 letters mentioning FINRA on POGO’s website.

The full text of POGO’s letter is available on RIA Biz’s website within the article.

Could this be another reason for wirehouse brokers to consider the independent route?  According to an article from InvestmentNews, compensation earned by financial advisors at independent firms (RIAs and Independent BDs) is creeping closer to that earned by wirehouse reps.  According to data from Sanctuary Wealth Services, LLC, the average compensation for elite brokers at wirehouses in 2012 — exclusive of their recruiting bonus — is expected to be $905,000, down from a high of $1.98 million between 1995 and 2003.  Meanwhile, financial advisors working at independent firms or at independent broker-dealers are expected to pull in $875,000 in compensation.

The research was derived from Sanctuary Wealth Services’ conversations with 60 top brokers earning more than $2 million in revenue and 25 elite registered independent advisers with at least $500 million in assets under management.  “The high-margin solutions are being rejected by clients because they didn’t work,” said a representative from Sanctuary. “Those high-margin products have typically paid the broker 2% to 5% of the invested capital.” The representative added that these days, clients are more inclined to get fee-only advice.

IAWatch reported on a letter sent by a nonpartisan government watchdog, the Project On Government Oversight (POGO), to the House Committee on Financial Services, on May 29th, urging rejection of the Investment Adviser Oversight Act of 2012 (H.R. 4624).  The letter, addressed to the committee’s Chairman (and bill sponsor), Spencer Bachus, and the committee’s top Democrat, Barney Frank, was sent just days before the Financial Services Committee is scheduled to hold a hearing on the bill.

While the letter generally opposes the act, which would authorize one or more SROs to oversee the investment adviser industry, the letter specifically targets FINRA, stating that its “regulatory effectiveness is undermined by its inherent conflicts of interest, its lack of transparency and accountability, its lobbying expenditures, and its executive compensation packages.”

In the letter, POGO notes an “incestuous relationship between FINRA and the industry it is tasked with regulating,” and cites cases involving Bernie Madoff, Jon Corzine, the Stanford firm, as well as lobbying by FINRA’s former Enforcement chief, Susan Merrill, on behalf of J.P. Morgan.  The letter notes, as further concern, that “some SEC officials may generally be biased in favor of the SRO model due to the extravagant pay packages they received while working at FINRA.”  For example, SEC Chairman, Mary Shapiro, and SEC Commissioner, Elisse Walter, received $8 and $4 million, respectively, when they left FINRA.

POGO concludes that “there is no substitute for governmental regulation of the investment adviser industry…Instead of delegating additional authority to private self-regulatory groups, Congress should reduce the SEC’s current reliance on FINRA and other SROs, work to improve FINRA’s transparency and accountability policies, and provide sufficient funding to the SEC to ensure that it is able to carry out its important regulatory duties on its own.”

According to an article in InvestmentNews, Schwab Advisor Services will join other financial services firms next week to protest the  Investment Adviser Oversight Act, a proposed bill which would authorize the creation of one or more self-regulatory associations (SROs) for RIAs.  In addressing the matter, Bernie Clark, executive vice president at Schwab Advisor Services, said that RIAs are best regulated through the SEC’s principles-based regulation as opposed to the rules-based SRO approach.

Earlier this week, the Project on Government Oversight (POGO), a government reform group, sent a letter to members of the House Financial Services Committee urging it to reject the proposed legislation.  The group was highly critical of FINRA’s inherent conflict of mission, lack of transparency and accountability, and excessive expenditures, such as executive pay packages and lobbying efforts.  The POGO letter noted that FINRA’s top 10 executives received nearly $13 million in pay and benefits in 2010.  In an email statement, FINRA responded that “POGO’s position is not an acceptable or realistic response to the critical need to fill an untenable gap in investor protection in the investment adviser space.”