Brooke’s Note: This was a fun story to report on because it has a surprising twist. It involves one of the fastest-growing RIAs in Rehmann Financial and a broker-dealer in Royal Alliance that seemed to be more likely to lose a hot RIA than to gain one. It’s about how these two companies seemingly headed in two different directions formed a promising marriage. The two articles that I wrote previously about the AIG Advisor Group subsidiary seemed to fit with statistics showing steady attrition of advisors from the company. These articles included: New RIA with a Royal touch about Barry Glassman taking his assets to Schwab Advisor Services and Why a Royal Alliance champion gave up the cause after AIG made changes which was about Jim Warren moving his practice to Geneos Wealth Management, following in the path of other Royal Alliance advisors. Elizabeth MacBride wrote an article about a loyal Royal Alliance advisor, Steve Cassaday entitled: A breakaway story, old-school style

The last few times Royal Alliance landed in the media spotlight, it was for the kinds of news stories make executives cringe: several big advisors — and dozens of smaller ones — departed Royal Alliance for other broker-dealers in recent years.

The departures were helped along by the turmoil surrounding Royal Alliance’s parent company, AIG. Some advisors said also that the culture of Royal Alliance had grown too corporate under the big insurer’s ownership.

Through this period of attrition, New York-based Royal Alliance stuck by its guns, with a message that it is, for instance, the broker-dealer to go to for forming a large branch office.

Summit Alliance Investment Group is a perfect example of the kinds of firms that are joining the explosion of signatories to Broker Protocol. The number of signatories to the document, which is essentially a no-fault recruiting tool, grew by 19 between Feb. 4 and March 8. The total now numbers 443, as you can see here.

Dallas-based Summit joined because it anticipates growth in its independent broker-dealer and, even more so, in its RIA. A broker who leaves one Protocol member company to join another Protocol member company is permitted to take his or her client list along, as long as certain strict rules are followed.

By joining the Protocol, Summit is opening the door in advance for high-producing brokers, most likely from larger companies, who want a new home.

“We just wanted to market ourselves in that way,” said Stan R. Hall, chief compliance officer for the two firms.

Elizabeth’s note: The assets in target date funds will grow to $7 billion in 2020, from 2.5 billion in 2005, thanks to a 2007 ruling by the Department of Labor that made the plans one acceptable default choice for employer plans, according to 401(k) research and rating company BrightScope. SEC Chairman Mary Schapiro remains suspicious. In a speech in early February, she noted that she has asked SEC staff to prepare a rule proposal to provide additional information to investors when a fund includes a date in its name. “Not all target date funds are created the same, and some with very near-term target dates lost substantial amounts of investors’ money in 2008,” she said. The SEC aside, Rob Isbitts lays out the reasons to steer clear of target date funds.

Target Date Funds are sold to investors as all-in-one investment portfolios in that they allocate amongst the broad stock and bond markets.

They are designed to adjust the allocation based on how many years remain until the investor’s target retirement date. This is not necessarily the date when the investor will stop working, but it is the date to which the fund is managed.

In other words, the target dates are set with the masses in mind, and the investor may choose a fund that is aiming to reach its objective at a point close to when they expect to use the money.

Fidelity Investments has launched a major reorganization of the company’s RIA business that includes folding relationship management and sales into one unit.

As part of the changes, Joe Giordano, executive vice president of relationship management at Fidelity Institutional Wealth Management, and Mike MacWade, senior vice president of client service and operations, are leaving.

The changes are being made in order to improve customer service, according to a memo obtained by RIABiz.

“I would like to thank Joe [Giordano] and Mike [MacWade] for their service to IWS and wish them well,” wrote Mike Durbin, president of Fidelity Institutional Wealth Management, in the e-mailed memorandum written to some RIA clients. “These changes are reflective of the evolution of the marketplace in which we are all operating, and I believe they will position us to provide you with the best experience for your clients and your business.”

Editor’s note: The story was updated, midday on Tuesday, in the fifth paragraph, to better explain that the language of the draft amendment is ambiguous on the question of what actions or business models would trigger oversight by the new board.

A fiduciary standard is becoming the phoenix of financial service reform.

This time, it’s rising in the form of legislation floated late last week by Senate Banking Committee member Herb Kohl, D-Wisc. The draft amendment to financial services reform legislation would require brokers, RIAs or planners who perform financial planning duties to be regulated by a new board that would promote adherence to a fiduciary standard.

The legislation, which is generating opposition from many quarters, faces an uphill battle. Still, it represents a triumph for the Financial Planning Coalition. The group, which was formed last year, includes the Certified Financial Planner Board of Standards Inc., the Financial Planning Association and the National Association of Personal Financial Planners. Together, they have been pushing against all odds for creation of an oversight body to regulate financial planning. They also are strong supporters of the fiduciary standard.

Elizabeth’s note: This guest column, by Janelle Sallenave, vice president of client experience at Schwab Advisor Services, offers a path for advisors eyeing the multifamily office bonanza. Definitions of ultra-high-net-worth vary, but for purposes of this column, it’s $25 million or more in investable assets. The path to serving the ultrarich is more or less clear, but once you’re on it, you might find it a little strange. The super-rich demand another world of service beyond the traditional strengths of many RIAs. Do you know a party planner who can reel in Madonna’s makeup artist for a teen-ager’s birthday party? Have a line on an appraiser willing to accompany an Imari collector to Europe? Are you equipped to cope with the disputes that arise as the scion of a wealthy family takes a greater role in a family business? One of the most important takeaways from this column is how much time you’ll need to spend considering exactly which clients your RIA is equipped to serve.

These days, a growing number of RIAs are looking more closely at the multifamily office (MFO) business model as they strive to move up-market and serve ultra-high-net-worth families. The appeal of working with affluent clients is obvious — and thanks to RIAs’ skills in client relationship management and investment management, and their reputation for transparency, RIAs are definitely suited to address the needs of multiple generations of highly affluent families.

That said, the challenges involved in transitioning an advisory practice to an MFO structure can be immense. If you’re considering entering this market, you should ask yourself these six key questions to determine if it’s the right move for you:

1. Who will you serve?

When identifying an ideal MFO client, it’s imperative to look beyond a simple asset target. The reason: Two ultra-affluent families with the same net worth could face extremely different challenges that require vastly different services. Consider, for example, how the needs of a family with a young entrepreneur patriarch might differ from the needs of a large, geographically diverse family with inherited wealth. It’s important to look for prospective clients who are highly aligned with you in terms of their overall approach and philosophy. Virginia-based Signature Financial Management, for instance, seeks to work primarily with highly successful business owners and executives who possess certain characteristics, like the willingness to delegate and a desire to use their wealth to achieve meaningful goals. According to co-founder Susan Colpitts, “We want to be the trusted advisor to people who view wealth and its potential as we do. It’s important to work with like-minded people.”

Constellation Wealth Advisors announced yesterday that it hired a former football star to join the firm as a principal. It hopes Steve Bono, working from its Menlo Park office, will bring aboard ultra high net worth clients.

The firm already manages about $4 billion, but in the contest for clients with $10 million or more in assets, the firm’s leadership thought that having NFL star on the team would help.

Bono spent fifteen years as an NFL quarterback, playing for seven teams, including in two Super Bowls and one Pro Bowl. He spent five years with the San Francisco 49ers. He retired in 2000.

“Steve is a California sports icon, an active member of the Bay Area community and a proven talent in the financial services industry,” said Jon Goldstein, co-CEO of Constellation. “He represents a tremendous resource to help fuel Constellation’s growth.”

Brooke’s Note: As part of the Asset Custody Project, I am speaking to leaders of the various asset custodians in the RIA industry to learn more about how they are trying to distinguish their services and products from competitors. In my interview a couple of weeks ago with Mark Tibergien, CEO of Pershing Advisor Solutions, we discussed the thorny issue of the custody of alternative assets. It’s a subject that most custodial executives prefer to say little about at all. What Tibergien had to say on the subject was detailed and complex enough that I pulled those comments out of the Asset Custody Project profile of Pershing that RIABiz ran last week. From the comments, I wrote this article.

In a recent interview, Mark Tibergien drew a distinction between Pershing’s approach to the custody of alternative assets and that of its rivals, saying that Pershing’s approach is easier for RIAs to deal with but still will be secure enough to satisfy regulators.

The Jersey City, N.J.-based asset custodian established nine requirements in September that alternative investments, such as private equity, hedge funds or private placements, must meet in order to be considered suitable for custody.

“We’ve developed a list of requirements consistent with where regulators are going,” says Mark Tibergien, CEO of Pershing Advisor Solutions.

Ben Valore-Caplan, CIMA, is a registered investment advisor who broke away from UBS in 2008 to provide a higher level of counsel to his clients under Syntrinsic Investment Counsel, LLC. He writes out his thoughts about matters relating to investments and sends them to his clients in periodic e-mails. When I read this essay sent out last week, I asked if I could re-publish it for readers of RIABiz and Ben kindly agreed.

The Egyptian Nobel Prize winning novelist, Naguib Mahfouz, once suggested that, “You can tell whether a man is clever by his answers. You can tell whether a man is wise by his questions.” Being in the business of asking and fielding questions, I agree.

People reveal their hopes, dreams, biases, and fears through what they want to know. The questions we ask reveal our intelligence, capacity for learning, and, yes, our gullibility. These truths are particularly relevant in the investment world where so many behavioral factors such as emotion and personality influence how people evaluate economic decisions.

The questions we ask as a society also reveal broader social trends and shifts in conventional wisdom. Now two and a half years into one of the most intense global economic crises in modern history, certain questions have become increasingly common from investment committees, boards of directors, and individuals throughout the country.

Elizabeth’s note: I e-mailed Ron Rhoades for his thoughts on the New York Times story, Trusted Adviser or Stock Pusher? Finance Bill May Not Settle It. He sent me this response, which covers a lot of ground. It lays out the depressing reality for advocates of the fiduciary standard in the 1940 Investment Advisers Act. Despite the fact that consumers are waking up to the importance of the fiduciary standard, as evidenced by the Times story, special interests are likely to prevail in Washington, D.C.

After decades of refusal by the SEC to apply the Advisers Act’s broker-dealer exemption narrowly, as Congress intended (and their continued inexplicable interpretation of when investment advice is “merely incidental” to a sales transaction), it’s no wonder that consumers are worried — as evidenced by the New York Times piece. (For RIABiz’s post on the story, click here). Now, it appears to me …

The Johnson amendment Is highly likely to be part of the Dodd Bill

It is highly likely that Dodd’s bill, when it finally gets released, will come out with the Johnson amendment included in it. The amendment, put forward by Sen. Tim Johnson, D-S.D., charges the SEC with conducting a study of the regulations governing brokers and advisers within 18 months. The agency would have to issue new regulations within two years. The Johnson amendment, in the eyes of many, leaves the “status quo” as to broker-dealer (BD) and registered investment adviser (RIA) regulation, as it calls for a further study of the issue. But – does the Johnson amendment really leave things status quo?

The “danger” of the Johnson amendment

The Johnson Amendment could be construed to give the SEC authority to “harmonize” and/or undertake another exemption from the definition of Investment Adviser Act. Consider this language from a draft of the amendment released a few weeks ago. The study referred to is the one authorized by the amendment to examine the regulations applying to broker-dealers and investment advisors.

In the past few months, the phrase “fiduciary standard” has migrated from trade publications to business weeklies to – yesterday – the front of the business section of the New York Times.

An article in the paper highlighted the difference between the image that wirehouses seek to project in advertisements, and the reality.

It also posed the twin questions of whether a fiduciary standard that applies to all investment advice would help bring reality in line with illusion, and whether that standard has any chance, politically.

In short, the story seemed to be all that any advocate for the existing fiduciary standard that RIAs now operate under could hope. The Committee for the Fiduciary Standard, an advocacy group formed last year, e-mailed it to its 700-plus members. Still, Ron Rhoades has his doubts whether even the nation’s most potent newspaper can make a dent on the fiduciary issue against the political steamroller in Washington. To read his reaction,click:Why the New York Times fiduciary article won’t deter the special interests in Washington

The SEI Advisor Network signed on 250 new registered investment advisors, increased assets under management to nearly $30 billion and generated $4.5 billion in new assets in 2009, according to a release from the company.

The number of new advisors that joined the turnkey asset management program of SEI represents a more than 40% increase from 2008. Assets increased from $28 billion at the end of 2008.

Most of those new advisors came to the Oaks, Pa.-based TAMP in 2009 because another advisor referred them.

But in 2010, SEI is hoping that a new program it launched in January will drive business from the industry’s most important centers of influence – the independent broker-dealers where most of its advisor clients are affiliated.

Brooke’s Note: This is the fifth article in the Asset Custody Project series.

To some financial advisors, it seems like Pershing LLC made its big move into the mainstream of the RIA custody business in 2007 — and then nothing much happened.

The company caught the industry’s imagination that year by hiring Mark Tibergien away from consulting firm Moss Adams LLP of Seattle. He arrived on the heels of the company creating Pershing Advisors Solutions in 2006, which had formerly been known as Investment Manager Services.

Tibergien had made his name as the top management consultant at Moss Adams, and some people believed the new CEO of Pershing Advisor Solutions could wave a wand to make Pershing’s assets balloon.

Brooke’s Note: You can’t hang around in the advisory community for long without hearing talk about the great opportunity represented by Baby Boomers rolling over their 401(k) plans into IRAs. Now imagine being a broker counting on that inevitable flow of assets and realizing that new rules could prohibit managing them. If the Department of Labor has its way, that appears to be the tectonic shift that is taking place. If you wonder why some brokers speak of “getting ahead of the curve” by breaking away to become an RIA, this turn of events would help to put their caution into perspective.

New regulations proposed by the Department of Labor could give fee-only RIAs a big leg up in serving the $4.1 trillion IRA market by, practically speaking, excluding dual registrants from giving advice on IRAs.

Most of the attention to the proposal has been devoted to its potential impact on advice for the $2.7 trillion 401k market. Read: Why the DOL’s proposed 401(k) rules could ding brokers and leave the spoils to RIAs.

That misses the point, some say.

Brooke’s Note: This article is about the potential for a big-time setback for securities brokers from a regulatory development in Washington. For years wirehouses have maneuvered past various SEC threats to getting paid for providing advice that didn’t meet strict fiduciary standards. Now it appears that a new less foreseen threat — new DOL regulations — could shrink the potential assets that brokers employed by big firms advise on. This article elucidates how independent advisors — and in a separate development index funds — may be well-positioned to capitalize on this potential upheaval.

At first glance, the aspects of the regulations proposed by the Department of Labor that apply to the 401(k) market don’t change the picture much for RIAs. The rules are aimed at eliminating advisors’ conflicts of interest, and would apply to brokers, including hybrid advisors, who give advice to 401(k) plans and earn any commissions from companies whose products are held in the retirement accounts.

It would also effect IRAs. Read: IRA assets could be ripped from the grasp of brokers if DOL has its way

But some independent advisors say the complex rules may benefit them in the long run if more advisors affiliated with big companies — who are the most apt to have such conflicts of interest — opt out of the $2.7 trillion market.

I’m happy to report on several changes at RIABiz over the past few weeks.

You may have noticed a new byline on our site. Sara Hansard, who covered Washington for InvestmentNews as Washington bureau chief and Washington reporter since that publication’s inception in 1997 until early 2010, has joined the RIABiz community as an occasional contributor.

We are happy to have her bring her deep reporting experience to RIABiz.

Prior to working at Investment News, Sara covered financial services and other Washington policy issues for the former Bridge News and Knight-Ridder Financial News as well as Dow Jones’ Federal Filings News Service. She has been a journalist covering industry news for nearly 30 years.

Brooke’s Note: When I learned yesterday that Nick Georgis was returning to Schwab to take on – in many ways – a more impressive job than the one he left, I began to make phone calls to people who knew him. It was a happy task. The surprise and pleasure at the other end of the line was of the kind you wish you got when you gave those books to your family for Christmas. But besides these emotions I also got the sense that people believed that Schwab had scored in luring Georgis back to downtown San Francisco after most of six years elsewhere. And Georgis is excited about his latest career move: “I felt like I was going back to school,” he says. “I had trouble sleeping and I was concerned about what tie to wear.” This article looks at this interesting turn of events.

There are at least two reasons to think that it was unlikely that J. Nicholas Georgis would have returned to Schwab Advisor Services after a six-year hiatus. See yesterday’s article: Nick Georgis returns to Schwab Advisor Services

First, the former sales chief of the big San Francisco-based asset custodian came to the company in 1991, when it was still in the entrepreneurial mode. What was then Schwab Institutional had only $8 billion of assets in custody at the time.

Often when companies grow from such a fledgling state into the dominant players in an industry, a whole new generation of executives takes the place of the original leaders. A new mindset and a new set of skills is required as a small battalion becomes an army.

Brooke’s Note: The on-site reporting for the this story was generously provided by Timothy Welsh, principal of Nexus Strategy LLC of Larkspur, Calif., who kept notes and gave me a report by telephone from the front lines.

The FPA Business Solutions 2010 conference kicked off yesterday in Dallas with a solid crowd, some big name speakers and lousy weather.

The fifth annual technology and practice management event of the Financial Planning Association doubled the size of its crowd to 300 attendees and sold out the exhibit hall.

The event featured Eric Haseltine as a speaker and Aaron Patzer as head of a breakout session. Patzer sold his company, Mint.com, to Intuit in September for $170 million before he turned 30.

J. Nicholas “Nick” Georgis has rejoined Schwab Advisor Services today as vice president, strategic business.

Georgis was hired by Bernie Clark, head of Schwab Advisor Services, and he will report to him.

Georgis, 55, worked in a variety of roles at Schwab between 1991-2004 and he was the company’s national sales director for RIA custody at the time of his departure. He worked for Russell Investments of Tacoma, Wash. as the managing director, wealth management, for its U.S. Individual Investor Services group in 2005 and 2006.

Georgis was responsible for building and managing Russell’s relationships with wealth managers, including RIAs. He was also part of that group’s senior management team.

Jennifer Chatman sat on a table at the front the lecture room of the Haas School of Business at Berkeley, with her legs dangling.

Silence. The 35 attendees from United Capital – a roll-up that’s looking to make a decisive move toward becoming a more cohesive RIA in 2010 – waited to hear what the professor of business management would say that to help them achieve their goal.

To create the moment of anticipation, Joe Duran, CEO of United Capital, spent more than $100,000 and for his investment, he expects big returns.

His stated goal for the conference was to teach the skills – and instill the culture — necessary for RIAs in cities around the country to acquire and assimilate other advisory practices the way that United Capital’s executive management does from the company’s headquarters in Newport Beach, Calif.

Brooke’s Note: A slide show of the conference can be seen on the jump page of this article.

In off years, a compliance conference might be considered, well, less than lively.

This year, with the RIA regulator world threatening to spin off its axis in Washington, D.C., the Investment Adviser Association’s annual compliance conference was abuzz with questions about the future of RIA regulation.

Will FINRA succeed in its bid to regulate hybrid RIAs, or even all RIAs? Are any ears on the Hill open to the RIA argument that a strong fiduciary standard is crucial to protect consumers? And everyone was listening to SEC Commissioner Elisse Walter for clues about what the SEC might do, in addition to or in lieu of legislation. And then, there were all the post-Madoff, post-crisis regulations that are taking effect no matter what happens on the Hill.

Attendance at the conference, co-sponsored by ACA Compliance Group, was up about 25% over last year, to about 200 attendees. About a dozen vendors filled a large alcove in the Crystal Gateway Marriott in Arlington, Va.

Check out this RIABiz slide show of the conference:

Brooke’s Note: Nobody likes lawyers until they need one. The same can be said for lobbyists who also tend to talk fast, eat in better restaurants and — according to Ross Perot — wear alligator shoes. RIAs could use a few more right now in Washington. As the only recognized lobbyist for RIAs, Neil Simon is almost singlehandedly taking on lobbyists representing scores of brokerage firms and insurance companies. Here are some of his words on the matter from a luncheon speech on Friday.

The most powerful lobbyist in Washington working for the interests of RIAs believes that the insurance industry now has the upper hand.

But Neil Simon, government relations vice president for the Investment Adviser Association, told about 200 attendees of the IAA’s annual compliance conference Friday that time may still be on the side of advisors who believe in a stringent and universal fiduciary standard.

“There’s still months and months of opportunity for us to fix this thing.” he said.

One reason I’ve shied away from the use of social media is that I hate abbreviations. I don’t like having to remember that IMHO stands for “In My Humble Opinion” or LOL means “Laugh Out Loud.” Despite my inability to cope with abbreviations, I recognize that social media is here to stay and the folks in compliance should point RIAs in the right direction. An abbreviated discussion of FINRA’s social media compliance guidance is a good place to start.

FINRA’s guidance has implications for RIAs

The Financial Industry Regulatory Authority (FINRA) provided guidance regarding the business use of social media in Regulatory Notice 10-06 on Jan. 25. Though FINRA’s Notice is aimed at securities firms and brokers, registered investment advisers (RIAs) will learn a great deal about social media compliance by reading it. Although the rules governing RIAs are different, an SEC or state examiner might take the same position as FINRA on your use or misuse of social media. Furthermore, registered reps who are also investment adviser representatives (IARs) for advisory firms should be paying close attention to FINRA’s social media guidance.

The Notice requires firms to ensure that business communications using social media are captured in accordance with books and records rules. According to FINRA, a firm must be certain it has the technology, system or program that will allow it to retain and retrieve communications using social media. The Notice cautioned, “FINRA does not endorse any particular technology necessary to keep such records, nor is it certain that adequate technology currently exists.” As I have indicated in previous postings, an RIA’s use of social media for business purposes is subject to the retention requirements of the Investment Advisers Act’s Books and Records Rule.

FINRA’s Notice warns broker-dealers and registered reps that they are subject to NASD Rule 2310 if a communication using social media constitutes a recommendation. Broker-dealers must determine that a recommendation is suitable for every investor to whom it is made. As a best practice, FINRA advises firms to consider adopting policies and procedures that prohibit specific investment product recommendations using social media.

I arrived at Berkeley yesterday in time to catch a lecture by Haas School of Business professor Jenny Chatman that delved deeply into the subject of leadership.

There was a sense of urgency in the classroom as United Capital’s 35 executives and financial advisors were quick to jump on any solicitation of thoughts from the professor. Leadership will determine the culture that determines the success of the aspiring consolidator of financial advisory practices.

Heather Underwood used good photography skills and good humor to get almost universal smiles out of this culture-minded crowd for this slideshow. Click “Show info” to see more information about each photo.

Securities and Exchange Commission member Elisse Walter today suggested a simplified approach to harmonizing regulations of investment advisors and broker-dealers that would call for advisors and broker-deals to pledge “to always act in good faith, and in the best interest of my client, and will act as a fiduciary.”

“We’ve been making it too hard on ourselves,” in trying to determine how to apply fiduciary standards to broker-dealers, she said in a speech at the at the Investment Adviser Association’s annual compliance conference in Arlington, Va.

Walter said she took her suggested language on the pledge from a recent New York Times blog reporter (she didn’t say who it was). She also suggested that financial professionals would be obliged to provide written disclosure in advance of conflicts of interest, as well as disclosure of fees they receive from transactions and fees paid by to others for getting client referrals.

Walter’s speech is significant in light of the jockeying on Capitol Hill, where the future of financial services reform legislation is still a big question. Walter suggested that the SEC could step up to the plate and take on the task of harmonizing regulations itself.

Nearly four weeks ago, Schwab Advisor Services began a new security program under which the giant custodian calls RIA clients to confirm they authorized certain wire transfers. Now, Schwab has told RIABiz in an exclusive interview that it plans to continue the calls indefinitely, and that the program is one of a series of measures designed to protect clients in a post-Madoff world.

“We’re just stepping it up in light of the last 18 months,” says Joseph Vietri, head of service, trading and operations for Schwab Advisor Services. “We avoided [putting assets at risk in the period of economic downturn and scandals] and that’s really important to clients.”

He declined to specify what the next steps might entail.

The confirm-call program is not popular with all advisors. In essence, their clients are receiving a call from their custodian that could be inferred to mean: we don’t trust your financial advisor 100%.

Brooke’s Note: United Capital has invited its partner RIA firms from around the country to convene at the Haas School of Business, which is part of the University of California, Berkeley. RIABiz will be there to hear lectures and interview and photograph the RIAs and executives comprising United Capital. Clearly the sessions are not intended as some educational fantasy camp. Joe Duran, CEO of United Capital, sees this as an investment in an important shift at the company toward growing its partner firms. But you don’t start adding partners without some training about how to structure your firm to absorb more talent. The Berkeley professors will lay the groundwork for that process to begin.

I’ve been writing about Joe Duran and his Newport Beach, Calif.-based consolidator, United Capital, for several years but I have never met the leader, his RIAs or his colleagues [like Matt Brinker] in person.

The company is admired by many people in the industry and I look forward to getting a first-hand look. It’s considered a rare example of a roll-up that works. Of course, Duran, United Capital’s CEO, doesn’t consider it a “roll-up” at all. His plan to bring his firms to Berkeley to learn about business management shows, it seems, that he’s putting his money where his mouth is to create a true organization.

A recent letter that Duran distributed explains the company’s ambitious objectives and makes clear what has drawn its principals and executives to the Haas School of Business.

Multi-Financial Securities Corp. announced yesterday that it hired James “Jay” Quinn as vice president and national sales manager.

The Los Angeles-based brokerage subsidiary of Cetera Financial Group brought him aboard to join Barnaby Grist, Cetera Financial Group’s executive vice president of wealth management, “to drive Multi-Financial’s advisory platform to the next level,” according to a statement from the company.

Grist was hired away from Schwab Advisor Services with a flourish at the start of February. Quinn, 50, worked for Schwab Advisor Services [formerly Schwab Institutional] from 1991 to 2004 as a vice president of sales. Grist started with Schwab in 2003 and oversaw business development.

Much of Multi-Financial’s platform improvement will be aimed at developing a more robust fee business, according to Cetera’s CEO Valerie Brown. Multi-Financial has about 1,000 reps.

Brooke’s Note: This article is the fourth profile in the Asset Custody Project series.

Derek Kennedy likes a number of things about Scottrade – after all, the Knoxville, Tenn., advisor custodies his client assets there, having moved them from Fidelity and Schwab.

Scottrade’s human touch is one thing. As a custodian, the company is a small, boutique shop with dedicated service reps for advisory practices.

The second thing that Kennedy likes is Scottrade’s bricks and mortar. The custodian is part of the nation’s largest discount brokerage, so there are 450 branches around the country. An RIA’s clients can find a branch almost anywhere to conduct business with someone fact-to-face.

Elizabeth’s note: Issues surrounding failures of big financial institutions are important to financial advisors on a number of levels. Never mind the broader economic and investing implications of their actions, mega-banks and their brethren are also the competitors of advisors, the employers of advisors and the source of most breakaways. After all banks now own all the wirehouses. With banks so inextricably tied to the advisory universe, it is important to consider the right course of action when they screw up — which they inevitably do. Sara Hansard has opened a window on this matter with her article. Neither saving AIG’s skin with a government bailout nor letting Lehman Brothers go down the tubes feels right to many people. This article advances our understanding of the issue.

While investment banks or broker-dealers may not like it, large financial institutions should have to go through bankruptcy proceedings like other companies, rather than a resolution system such as the one banks currently fall under, a group of free market academics and an investment advisory firm said Monday.

Invitation-only group

The “Shadow Financial Regulatory Committee,” sponsored by the American Enterprise Institute in Washington, called for subjecting large, complex financial institutions to the current judicial bankruptcy system. The bankruptcy system offers more certainty than a resolution system in which decisions about winners and losers are more arbitrary, according to Robert Eisenbeis, chief monetary economist for Cumberland Advisors, a registered investment advisory firm based in Sarasota, Fla., that manages more than $1.3 billion. Eisenbeis is a member of the Shadow Committee, an invitation-only group of about 8-9 people with expertise in financial services policy issues.

“If you don’t have certainty, you raise the cost of equity; you raise the cost of financing,” said Eisenbeis, who is a former research director at the Federal Reserve Bank of Atlanta.