Brooke’s Note: Just because you’re paranoid doesn’t mean…you know the rest. I think there’s an ironical phrasing that can be used, too, for the people who are more shocked, shocked by the “shock” value of PBS Frontline than by anything that it revealed. How about: Just because a journalist achieves shock value doesn’t mean that the subject matter isn’t pretty darn shocking. Yes, those of us who really know the business know it could have been much, much better — and there was at least one overreach. The documentary was being done by a person, Martin Smith, who is — by his own frank admission — keeping a small production company going past retirement age because he doesn’t have enough to retire on. In other words, one behind-the-eight-ball baby boomer artsy type takes on the mutual fund and 401(k) business. You can see the glass as half empty on that; I see it half full. Smith had the courage to show that aspect of ourselves that we hide more than our sexual quirks — money issues. Sure, he could have balanced the PBS piece by ...

Brooke’s Note: The whole RIA higher ground is that its advisors live by the spirit of the laws, not necessarily getting carried away by the letter. It appears that DOL is having to parse out these differences — getting closer to fiduciary care by embracing some conflicts whose eradication does more harm than good. This is not a robot’s game. Nor should things get too expediency oriented. Phyllis seems up for the hair-splitting.

Assistant Secretary of Labor Phyllis Borzi, who oversees the Employee Benefits Security Administration, recently tipped her hand to advisors, offering a glimpse of some new rules her agency may be releasing later this year that industry leaders say could be a boon to IRA rollovers for RIAs.

The details of the rules haven’t been finalized yet, but it appears that there could be exemptions for certain conflicts of interest, while some fiduciary standards could be stiffened.

Borzi made these comments last week on a panel at the annual gathering of the Investment Management Consultants Association in Seattle.

Brooke’s Note: Well, all views are welcome. Do I understand correctly that the FSI’s view is that we can’t afford a fiduciary standard? And that eliminating the cost of imposing one will save small firms? Maybe that will work. In fact, it would probably work for the American health care system to harmonize the credentials of doctors, nurses and chiropractors to save us all money. Thank you to Jimmy Moock for applying his ear for telling quotes for the benefit of all of us trying to discern just how FINRA promoters advocate their position. See: RIA loyalists slam the SEC for playing into FINRA’s darkest characterizations of haplessness.

Dale Brown, president and chief executive of the Financial Services Institute Inc., has lobbied lawmakers and industry leaders hard to reconsider how the fiduciary standard is finalized and implemented.

So, it was no surprise to an audience of more than 70 wealth management industry professionals at Gladstone Associates LLC’s annual M&A conference that Brown chose to use his featured-speaker position to drive home the point. See: Bill Dwyer tells RIAs to advise more — albeit with heavy ...

Rep. Maxine Waters (D-Calif.) isn’t giving up on her mission to bolster examinations for RIAs and has crafted another bill that would authorize the SEC to collect user fees from advisors in an effort to examine more of them each year.

Even though industry leaders aren’t optimistic that this measure will have any success in this congressional session, they say its biggest success could be pushing off efforts for a self-regulatory organization run by FINRA.

“I think it’s highly unlikely that the user fee bill will go anywhere during this Congress. But it may forestall attempts by FINRA or its allies from moving forward on an SRO bill,” says David Tittsworth, head of the Investment Adviser Association. See: FINRA is making dog whistle comments hinting its SRO ambitions still simmer.

Waters submitted H.R. 1627, the Investment Adviser Examination Improvement Act of 2013, last week. It would allow user fees to be collected from SEC-registered advisors to defray the costs of inspections and examinations. Those advisors registered with the states are exempt. See: RIAs switching to state registration may be examined by a second regulator, too.

Brooke’s Note: As long as the 401(k) industry is dominated by brokers looking to make a buck and employers happy to go along with that sales culture in the name of expediency then plan participants remain an afterthought. Fancy new rules form the Department of Labor are worth the paper they’re written on. For now, there is still a strong, and perhaps strengthening tide of inertia that is winning the day, according to Scott Pritchard who spends enough time among employers to get a pretty good read on the situation.

First proposed in 2007 by the Department of Labor, Regulation 408(b)(2) was hailed as a game-changer for the 401(k) industry. For the first time, plan sponsors and participants would know exactly what their 401(k) plan was costing them, because 408(b)(2) would finally force service providers to disclose all of the compensation they receive from a plan. See: Why the DOL’s massive new 401(k) disclosure requirements are a 'very, very big deal’.

The thought was that plan sponsors and participants who had for years been blind to the hidden costs ...

Brooke’s Note: How do you get Chris Dodd and Barney Frank in the same room, same day and for the first time with financial advisors in Las Vegas and during the early holiday season — with a cocktail clause requiring mingling with your troops in a reception atmosphere? Yes, you pay them a boatload of money. But if you’re Brian Hamburger and crew, you also work the phones rather intensively because of your “overnight” and “mingling” demands and the need to negotiate with two speakers bureaus who have little regard for accomodating each other. Could a big custodian have pulled this off? Maybe not, considering that outsourced conference staffs may not have been excited about getting thrown into not-in-the-playbook negotiation. It’s the kind of thing you pay high-level lawyers with negotiating skills to do — lawyers like Hamburger. So this coming together of Dodd and Frank in front of RIAs has to be appreciated for the fortunate alignment of stars and dollar bills. Such confluence probably only occurs when a conference organizer is still small enough to do home-cooked negotiations but big enough — and risk-hardened enough — to write some ...

Brooke’s note: This RIABiz column is riddled with potential conflict. First of all, RIABiz is at least obliquely in competition with Barron’s so any criticism of them that we publish needs to be looked at with some suspicion. Not only do both our publications have some overlap in covering advisors but we both publish lists that include advisors. See: 10 most influential RIA figures going into 2013 and how they’re reshaping the industry, Part 1. And, who knows, some day we, like Barron’s may even have a conference based on one of our lists. The author of this column, Jack Waymire, also has a potential conflict in the sense that his company earns revenues based, like Barron’s, on identifying top financial advisors. Even realizing all that, we are inclined to run this column and take our lumps. As the dispenser of the advisory version of papal blessings, Barron’s authority in saying who is best among advisors is all but free of critical observation. See: The top 10 things you need to know about the new Barron’s Top 100 List. Anybody on the list ...

Brooke’s Note: It’s largely agreed that the SEC is far from perfect in overseeing RIAs. See: RIA loyalists slam the SEC for playing into FINRA’s darkest characterizations of haplessness. On the other hand, the SEC seems to have at least taken the regulator’s version of the Hippocratic oath: First, do no harm. FINRA, on the other hand, has well-meaning rules but they are generally enforced in such a rigid way that they can have negative outcomes. It’s a letter-of-the-law literal mentality. So when FINRA people speak, they expect people to hear words and not meanings. But RIA people, especially extra-perceptive ones such as Pat Burns, hear meaning. And here, he calls out FINRA for what it really said, for people listening with their minds and not just their ears. See: Analysis: Beware of a FINRA bearing gifts for RIAs.

There have been some recent media reports that FINRA may be retreating from its efforts to regulate investment advisors. Then, last week, on March 14, remarks made by its chairman and chief executive, Richard G. Ketchum, at the Consumer Federation of America Consumer Assembly cast doubt ...

Brooke’s Note: LPL now has about 20 stunning clients that add hundreds of advisors and billions in assets on a continual basis. These OSJs are, in effect, mini-LPLs and that makes LPL a sort of broker-dealer to broker-dealers. What could possibly go wrong? Well, needless to say, it creates an enormous compliance challenge — making sure all those reps and sub-reps stay within increasingly complex and rigid guidelines. So far, mostly so good, but this incident shows how seriously even a minor coloring outside the lines needs to be — and seemingly does — get taken.

After the SEC came knocking on the doors of one of LPL’s largest advisory firms it set off quite a flurry of events.

Tampa, Fla.-based Independent Financial Partners has undergone an overhaul in the last few months after asking LPL to take over its compliance and has temporarily halted its recruitment of new advisors, according to a statement from LPL. In addition, the OSJ fired its former compliance officer and has hired a replacement as well as hiring a new general counsel, according to sources who asked not to be identified. Chief executive William ...

Brooke’s Note: It’s advice that can be used in almost any situation: When you’re tempted to dump all of your frustrations on some external evil force, you’re often better served re-channeling that energy toward getting your own house in order. There are great arguments for why and how the SEC can be preserved as the overseer of RIAs as opposed to FINRA. But those arguments will be much more convincing if the SEC has its own ducks in a row and shows that it can examine itself objectively. Skip Schweiss, Brian Hamburger and David Tittsworth — using hard data and their close-to-the action perspectives — suggest that the SEC has a little housekeeping to do.

Drawing the ire of even its most diehard supporters, the SEC is conducting fewer RIA examinations despite garnering a bigger haul of taxpayer dollars. This seeming incongruity is a problem in the face of the fact that a pillar of FINRA’s argument for taking over the RIA realm is that it can do more examination — as proven by its high examination rate of brokers and its ability to bring the needed resources ...