The MarketCounsel Member Summit hums in the Nevada desert

As I listened to speakers at the MarketCounsel Member Summit ranging from Joe Duran of United Capital on entrepreneurship to Scott Welch of Fortigent on Money in Motion, I was aware of a variety of sensations.

First of all, this is a conference in the Red Rock Casino, which is a posh nest of development that looks like a sizable shopping mall. It sits on the outskirts of Las Vegas in a spot reminiscent of where they find the bodies in CSI.

My cabbie explained that this remote casino on the edge of desert terrain is largely supported by the locals who find the Strip distasteful but happily blow a few bucks at this kind of a venue. [My driver added that even Las Vegas veterans are a little taken aback that Red Rock has daycare services for gamblers.] The lights of downtown Vegas twinkle in the far distance.

Though my surroundings make me think of murder mysteries, the people populating this event are lively, including Nick Georgis of Schwab, Elliot Weissbluth of HighTower Advisors and Randy Bullard of PlaceMark. Tracey Thompson of Black Diamond, Mike Wilson of Morningstar, Eric Clarke of Orion and Bob Oros of Trust Company of America are other familiar faces. I finally met Ryan Shanks, CEO of Finetooth Consulting, in person.

Cross-section of RIAs and industry elite

I’m impressed that an event that has many elite executives also is loaded with a cross-section of many sizes of RIAs. In the general sessions I was seated beside Mark Herman, principal of Up North, an RIA based in Travers, Mich., which manages $50 million.

To my left was the recently hired chief compliance officer of Leawood, Kan.-based Mariner Holdings LLC, which has a series of subadvisories [including hedge funds] with a combined $7 billion [including $1 billion of wealth management AUM.] The company’s founder, Marty Bicknell, has been quoted in press reports saying he’s seeking to grow the practice to $50 billion of AUM.

Besides the interesting mixture of clientele here, the conference is notable for being dominated by regulatory and compliance experts from the host firm, MarketCounsel. Early sessions were an avalanche of information related to these subjects that were not easy on the listener though loaded with nuggets.

Brian Hamburger, CEO of MarketCounsel, was quick to acknowledge that his intent was to get the compulsories banged out early in his three-day event. “This is kind of a stress test,” he said.

Brian Hamburger: The friendliness doesn’t appear
when we deal with FINRA. [Photo
by Catherine Taylor]

SEC demurs

He started off by saying that a fundamental issue for the advisory industry is that there simply is not a good strong regulator. The SEC may have gotten the worst of his criticism, and he said that virtually everyone invited to his Las Vegas event accepted, except the SEC.

One example he gave of why the SEC is a toothless tiger was that its agents were given Blackberries, but that they were not expected to answer except during strict nine-to-five-type hours. “Maybe I’m doing some SEC bashing,” he said.

But Hamburger’s comments about state regulators and FINRA were no more sugar-coated and the FINRA-as-Devil reputations are apparently not baseless. “The friendliness doesn’t appear when we deal with FINRA. Is that an okay way to put it?”

He made the state regulations sound like a a not-ready-for-prime-time lot. “California has a 90-day waiting period to get registered,” Hamburger says. “Texas is humming but others have one part-time person.”

At the root of the state problem is that the undermanned state bureaucracies have virtually no means of generating more of a budget to handle the 4,000 RIAs that they are going to take on.

The hands-down star of the event was Joe Duran, CEO of United Capital, which manages $13 billion of assets from 29 offices and was only founded in 2005. He made a chilling case for why RIAs could face far more of a threat from TD Ameritrade, Fidelity and Schwab retail branches than anyone realizes.

Folks will get wiped out

“There is an absolute tsunami coming. There will be a lot of folks wiped out and [big competitors] will charge 30-40-50 basis points and that’s the pricing we’ll all have to live with.”

[He added that his company is developing a business model to counter the threat by emphasizing wealth management. Duran says his company signed another deal on Friday for a $1.7 billion RIA.]

Scott Welch, senior managing director of Fortigent LLC, a Rockville, Md.-based outsourcer of wealth management services for $40 billion of assets, tackled a crackerjack subject – “Money-in-Motion” – and made a couple of interesting statements about the state of the American investor.

Hopeful for RIAs is a lag effect from the fallout from 2008. Many of the assets held by unhappy clients are still, he says, sitting largely in cash. As clients get invested in a more stable investing environment, the clients will seek new advisors. “We’re beginning to see that,” he said.

For more about this conference, see: Two upcoming elite industry summits promise elbow rubbing and brainstorming par excellence