Archive for September, 2016

@HDelux criticizes SEC Initiative to Examine RIAs Hiring Advisers with Checkered Pasts to @AdvisorHUBinc @AdvisorHUB

Thursday, September 22nd, 2016

Registered investment advisers who have opened the door to employees who have “a history of disciplinary events” could face additional examination scrutiny as part of a Securities and Exchange Commission sweep announced on Monday.

Brian Hamburger, an attorney whose firm MarketCounsel helps brokers set up RIAs, criticized the initiative as a “diversion of resources” that would discourage firms who lawfully employ previously-reprimanded individuals.  “The time to impose sanctions on violating representatives is at the time of the wrongdoing, not by way of a tax upon those firms that hire representatives with some type of disciplinary history,” Hamburger said in an emailed statement.

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We like digging tunnels @HDelux to @RIABiz, “$2.2 billion team tunneled out of Morgan Stanley-taking absolutely no chances with the guards”

Wednesday, September 21st, 2016

That said, 6 Meridian did not execute its breakaway without the help of professionals in the people of MarketCounsel. An elaborate plan was required mostly because of the team’s size.  “The more people the more careful you need to be so that everyone is in lockstep,” says Brian Hamburger, CEO of MarketCounsel.

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@Ann_Marsh talks about the new fiduciary registry promoting advisers’ best practices. @HDelux provides his thoughts.

Wednesday, September 21st, 2016

By prompting firms and advisers to publicly state and legally disclose these practices, the institute is “cleverly” placing the onus for compliance on firms and advisers, who could face regulatory discipline if it’s found they were not fulfilling all the obligations of the best practices, says Brian Hamburger, general counsel of the institute’s Best Practices Board, which has worked on developing the program over the last two years.  Hamburger is also co-founder of compliance consulting firm MarketCounsel and runs the Hamburger Law Firm.

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The transition to independence isn’t for everyone. Kenneth Corbin weighs pros and cons with @finplan and @HDelux.

Wednesday, September 21st, 2016

Brian Hamburger, president and chief executive of the Hamburger Law Group and MarketCounsel in Englewood, New Jersey, who assists advisers making the transition to independence, points to friction between the large wirehouses and their in-house advisers and their clients.  “This has been a trend since 2008. These firms have been scratching to increase margins,” Hamburger says.  Often the result is that the firms will reduce adviser compensation or increase fees for clients.  So, for instance, some advisers grow exasperated when, out of the blue, their employer alters the compensation grid or changes the features of its products so that the advisers must explain to their clients why a long-held position suddenly has new fees or higher minimum requirements.  “They feel that they have no control over these changes,” Hamburger says. “Advisers feel that they lose credibility.”

Hamburger recalls a client who came up through the ranks working with Merrill Lynch, saying that simply flashing the card emblazoned with the trademark bull would get him into meetings with prospective clients who otherwise never would have given him the time of day.  But over time, that changed, and Hamburger’s client found himself relying less and less on the cachet of the brand name on his business card.  “That brand probably has more value than the young professional’s personal brand,” Hamburger says.  “But over time,” as the adviser has built a business and established a stable roster of clients, “the relative value of that [wirehouse] brand has dissipated,” Hamburger says.

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Betterment #Brexit trading delay could set example for digital advice industry. @HDelux chats with @sulemandin @finplan

Wednesday, September 21st, 2016

MarketCounsel CEO Brian Hamburger — who counts Betterment as a client, but is not representing the firm in this matter — says the robo did not break any rules in how it communicated its delay decision.

“There’s really nothing wrong, absent specific policies, with furnishing clients information based on their ability to digest and utilize that information,” Hamburger says, noting that advisers on Betterment’s RIA platform are not clients themselves, but acting as intermediaries. “They are professionals, and that is part of their professional judgment.”  He describes the letter’s language about fiduciary duty as “examiner bootstrapping,” and compared it to letters advisers received seeking details about their business continuity plans in the wake of the 9/11 attacks, though no rules were in place regarding them.  “The fiduciary obligation is intended to ensure advisers are not putting their own interests ahead of clients,” Hamburger says. “Regulators routinely use that language.”

Hamburger notes the Secretary of the Commonwealth William F. Galvin has led state regulators in addressing issues under federal law, namely automated advice platforms and data security.  All robo advice platforms will be affected by the outcome of the new request, Hamburger adds.  “It will be interesting to see how Betterment responds,” he says. “Sometimes firms, to placate regulators, take the path of least resistance. But firms have to take a look at what they are agreeing to do.”

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@HDelux presents new study by the Institute for the Fiduciary Standard (@CmtForFiduciary) that highlights conflicts via @wealth_mgmt

Thursday, September 15th, 2016

“Investment advisors, when we speak to them, seem more willing to cloud their disclosures or their disclosure documents with conflicts of interest,” said Brian Hamburger, president and CEO of MarketCounsel and the Institute’s best practices board general counsel. “They seem less concerned that clients will raise issues with respect to conflicts.”

Ten years ago, about a quarter of MarketCounsel’s RIA clients had some type of registered rep or transaction-based relationship alongside their investment advisory fees. In the Institute’s study, more than one-third (35 percent) of RIAs have investment advisor representatives who are also registered reps of a broker/dealer. Thirty-nine percent report employees who are licensed to sell insurance.

“That bolsters the idea that there’s a greater acceptance of conflicts of interest.”  Hamburger attributes the increase in conflicts to the 2008 crisis. Prior to 2008, it was easier for an advisor to forgo the revenue at a b/d to go independent, knowing that they would have higher growth rates as a fee-only advisor.  “Post-2008, those growth rates are a little more difficult to come by,” he said.

But one can have a conflict without necessarily being in the wrong, Hamburger said.  “This study really points to the fact that advisors are running very distinct and disparate practices among them,” he said. “Even when you look within these numbers, what you don’t see is the quality and the manner in which they’re actually handling these conflicts.”

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@HDelux video shoot: we’re ready for the WealthManagement.com 2016 Industry Awards @wealth_mgmt

Thursday, September 15th, 2016

See video.