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YOUNG: You have to take all that into account. For example, like the massive amounts going into ETFs when they are less expensive and more tax efficient. They have all kinds of benefits. If we can do that for our clients, we should definitely be moving there. As far as your point with international, you talk about 98 percent of the investors being in the U.S. market a few years ago. We’re still the leader in the world, but there are a lot of different places catching up with us; they are on an emerging path, and we’re on more of a static path and Europe is on kind of a downward path.
ULBRICH: But it’s companies that are changing as well. To say, “I just want to own U.S. companies. Go buy me some G.E. and Caterpillar.” Well, guess what? Welcome to international investing. Companies have expanded at the same time. So it’s understanding all of those aspects.
What changes have you seen in compliance over the last 20 years?
NEWTON: One of the biggest changes that we’ve seen in compliance is from the self-regulatory organization (SRO) standpoint. I’ve been involved with the Financial Planning Association nationally for several years, and I approached them about having an SRO for financial planners. They started to seize that and say, “What if we lumped that together with investment advisors,” because there was already talk about taking it away from the SEC because the SEC couldn’t seem to handle it. We’ve seen the SEC shedding themselves of investment advisors with assets under management of under $100 million and pushing that to the states.
We see FINRA definitely wanting an SRO for investment advisors. Even though the business model is different than what it is for brokerdealers, they are trying to take that over.
JOHNSON: No question there is a bigger administrative burden on us, and we have to spend more time on some of the regulatory matters. But one of the good things about it is there is increased disclosures and transparencies so that clients know exactly what they are paying in layman’s terms and just understand their investments better. There is a bigger burden on us to know our clients and provide suitable and appropriate investment guidance for them. That’s not necessarily a bad thing.
EYRE: We are absolutely affected by both CFPA and Dodd-Frank in a big way both from a wealth management side and in normal banking operations. It’s a new world. It’s like it was when I started in this business back in the ‘80s—it was easy to make a buck in banking back then. But it’s a different world now with deregulation, and now I think we are returning back to a heavily regulated industry.
If someone wants a financial advisor, is there any reason to direct him or her toward someone with an office as opposed to an investment bank? Is there any difference?
MCNEAL: It’s the person that’s more important than anything. If you find a great doctor or a great CPA, don’t go anywhere else. Stay with them regardless of who they work for.
I’m not going to try to knock on independents, but I’m going to tell you that all the big ones out there, they have the compliance departments. All that is taken care of. Whether you go with a UBS, JP Morgan or Morgan Stanley, that is not as important as picking the right person, the person that’s going to do the right thing for you and the person who knows what they are talking about.
KRULL: I would take that a step further and say that it’s not just the right person—it’s finding the right team that has the resources available to be able to manage the type of complexities in your personal financial situation. Does the firm have the ability to analyze different types of tax strategies, being prepared for a liquidity event? Does the team have the ability to sift through investments in a foreign country? Do they have the ability to be able to structure credit facilities beyond a traditional mortgage or a home equity line?
YOUNG: If you are out there shopping for an advisor, you want to look at their experience, how long they’ve been practicing, how many markets they’ve been through. You want to look at their track record. The advisor would have to provide his track record for his clients that he works with.
JEFFERIES: Step number one is to define what you’re looking for in a financial planner. If it’s a comprehensive financial planner, you need to make sure you obtain that and not somebody who is potentially going to sell you products or just serve one element of your needs.
BAPIS: I’m not sure I agree. The wire house where I was for 40 years, the registered investment advisor and broker-dealer where I am now, I think they all can offer financial planning. They can offer stock trading. The registered investment advisor may not be up for the stock trading, but they can offer mostly the same things. As you said, the most important thing is to find a person that you can work with and feel comfortable with.