financial advisor

The proposed regulation that could expand fiduciary status to a broader set of financial advisors appears to be pending in Congress.

The Dodd version from the Senate Banking Committee would potentially extend fiduciary status to broker-dealers and registered representatives.  Broker-dealers are currently exempt from the Investment Advisers Act which defines fiduciary status.

Is there a financial equivalent to the maxim “first do no harm?”

What if one of the guiding principles of medicine was applied to the world of financial advice?

What would the financial services landscape look like if product manufacturers and advisors were required to play by rules similar to those that exist for physicians?

First, my guess is that the financial corollary to the application of primum non nocere (first do no harm) would be:

Many financial advisors seem conditioned to wear annuity criticism as a sort of badge of honor. 

As the past couple of years have so painfully revealed, however, this conventional wisdom rests on shaky ground.

What types of questions might a client present to an advisor who appears to have a reflexive inclination to dismiss most or all forms of annuities?  Consider the following:

1.  How are my assets hedged against longevity risk?  In other words, how am I protected from outliving my money?

Andy Sieg is the head of Retirement Planning and Services for Bank of America Merrill Lynch.

Sieg provides his views on retirement planning reform in a recent op-ed piece in Investment Advisor.

Among Sieg's points are:

A recent study by IbisWorld estimates that the cumulative revenue growth in the retirement planning industry over the next decade will be 134%.

Demand for skills in and around retirement income products and distribution is very high at the moment, and this will likely continue to be the case.

BofA Merrill is focused on recruiting more of its existing corporate customers to its retirement planning business.

Reuters reports that the brokerage firm has recently formed three new teams of advisors what will focus on serving the retirement plans of Bank of America's current corporate and investment banking clients.

The Wall Street Journal reports that there are increasing numbers of financial advisors leaving larger Wall Street firms to pursue careers as independent advisors:

• The number of financial advisors at major Wall Street firms fell 14 percent to 55,000 for the three years ending December 2008.
• The number of independent advisors increased 29 percent to 33,000 during the same period of time.

The financial crisis had a clear impact on larger firms such as Merrill, Smith Barney and UBS.

Bank of America is positioning itself to capitalize on perceived opportunities in the retirement planning market.

Bank of America's acquisition of Merrill Lynch creates a number of new and interesting cross-selling opportunities.

The head of BofA's wealth management and brokerage operations, Sallie Krawcheck, has identified retirement as a growth driver for the company.

Source: Financial Planning Magazine

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The Department of Labor has suspended a Bush Administration rule that would have allowed financial advisors to provide investment advice to their 401k customers.

The Pension and Protection Act of 2006 contains a provision that allows financial advisors who manage company 401k plans to provide investment guidance to the 401k plan participants.

The number of mass affluent investors using an independent financial planner is roughly equivalent to the number using a full service broker.

A recent survey of 1,498 households with assets between $100,000 and $1,000,000 reveals that 22% use an independent financial planner as their advisor.

The number of mass affluent households using full service brokers is also 22%.

The number of households using registered investment advisors (RIA) is 6%--a decrease of 4% from the previous survey in October.

Source: Financial Planning