February Firm Element Best Practices Webinars

Quest CE will host a series of Firm Element Best Practices Webinars on February 14th and 15th, 2012.
Sign up today to stay on the cutting edge of compliance.

February 14th at 11:00 am CST | Register Now February 15th at 2:00 pm CST | Register Now

Small Broker-Dealers Stay Cool under New Market Pressure

According to an AdviserOne article, broker-dealers find themselves in a new financial services environment with new and increased rules and regulation, fee compression and industry consolidation. These hazardous conditions leave some uncertain about how broker-dealers will adapt to their new environment , questioning if smaller firms in particular will thrive or fall victim to the rapidly changing conditions. Smaller broker-dealer firms do not seem as bothered by the new territory, and are confident they have what it takes to make it in this market.

Wall Street Financial Group’s Joe Richards and Marshall Leeds, Summit Financial Services Group’s chairmen and chief executive officer believe that there are two essential elements for smaller firms to focus on, “the need for outsourcing and a clean compliance record when it comes to the products they approve. The latter, in particular, along with its associated liability, has caused a number of smaller firms to recently close their doors.” “With technology, as an example, it doesn’t make sense for a broker-dealer of our size to develop it in-house,” Leeds says. “It’s much more cost effective and state-of-the-art to outsource to technology providers, often through our clearing firms, Pershing and Wells Fargo. And once I invest in the technology, the updates are automatic, so I don’t have to worry about it being cutting-edged. We offer a technology buffet, and we let the advisors choose the providers they want to go with.”

The article concludes that as long as smaller firms continue to maintain their populations of dedicated representatives, maintain the highest standard of compliance, and outsource when necessary, they will have a better cehance at market survival.

Click here to read the complete AdviserOne article: “Small Broker-Dealers under Fire but Confident: FSI OneVoice 2012”

SEC Issues Fee Rate Advisory #5 for Fiscal Year 2012

Following Section 31 of the Securities Exchange Act of 1934, the Securities and Exchange Commission (SEC) worked with the Congressional Budget Office and the Office of Management and Budget to decide the annual fee adjustment.

They announced on February 21, 2012 the fee rate that is applicable for most securities transactions will move from $19.20 per million dollars down to $18.00 per million dollars. The fee rate for security futures transactions will remain $0.0042 for each round turn transaction. The previous fee rates for fiscal year 2012, announced May 2, 2011 never became effective, and instead the SEC issued these revised rates following the Exchange Act amendments and requirements.

Click here to read the complete SEC press release: Fee Rate Advisory #5 for Fiscal Year 2012

Click here to read the complete SEC order: Order Making Fiscal Year 2012 Annual Adjustments to Transaction Fee Rates

The SEC status update: A Year after Fiduciary Duty Rule Proposal

According to an AdviserOne article, we have reached the year mark after the SEC told Congress, under Section 913 of the Dodd-Frank act; they recommend brokers comply with a fiduciary duty rule. After providing their recommendation last January 21, lobby groups along with governing bodies have made creating a fiduciary rule proposal difficult for the SEC.

SEC Chairman Mary Schapiro has released that the proposed fiduciary rule will not only be released this year, but those responsible for rule analysis will be asking the public for their opinion. “Industry officials predict that this will likely push back an unveiling of a fiduciary proposal even further.” As suggested by members of governing bodies, the SEC has taken the time to find a more cost-benefit analysis solution, and this process has also taken more time than the SEC initially predicted for drawing up the fiduciary duty rule.

Although some are frustrated with the extended proposal timeframe, others think this is a positive approach for the SEC in the development stage of the fiduciary rule proposal. “Fortunately, the SEC has decided to give the [fiduciary] issue more study and conduct a robust cost-benefit analysis before proposing a rule,” says Robert Miller, president of the National Association of Insurance and Financial Advisors. “An SEC fiduciary rule has the potential to bring so many unintended consequences it shouldn’t be rushed into. We’re pleased that the SEC is apparently working to address some of the unanswered questions left by the original study” like the costs of such a rule.” “NAIFA is encouraged by recent signals that the SEC is taking a deliberate approach and performing a detailed cost-benefit analysis on the proposed fiduciary rule,” Miller said.

Click here to read the complete AdviserOne article:  Fiduciary Duty Rule: A Status Report One Year Later

The Shift of Firms' Focus Declines Wirehouse Market Share

According to an AdviserOne article, as firms are shifting their primary focus towards profitability, wirehouses are losing their control in asset management marketing share, but reports from the financial services industry research firm Cerulli Associates says that Bank of America Merrill Lynch, Moran Stanley Smith Barney, UBS, and Wells Fargo will continue to remain the "largest distribution channel by a factor of nearly two."

The report in the The Cerulli Edge: U.S. Asset Management Edition concludes that wirehouse assets under management will decrease from 43% in 2010 to 35% in 2013, but the distribution channel for independent broker-dealers is expected increase AUM market shart from 16% in 2010 to 18%. According to Bing Waldert, Cerulli's director of research and analysis, "A decent amount of the market loss can be attributed to forcing out smaller advisors." This does not mean that financial advisers do not have opportune circumstances for career choices. Waldert continued by saying "If you're at a half-million dollars in production, [the current wirehouse focus on profitability] isn't going to come as a surprise to you.

Saxon Sorrentino, director of business strategy and development for investment services firm Fiserv said, "A healthy migration of advisors to the independent and hybrid channels will continue simply due to the increased availability of third-party advisory technology options, platforms and 'out-of-the-box' solutions that can replicate the breadth of wirehouse solutions with the added benefit of increased flexibility."

Click here to read the complete AdviserOne article: “Wirehouse Market Share Declines as Firms Focus on Profitability”

FINRA Regulatory Notice 12-05: Verification of Emailed Instructions to Transmit or Withdraw Assets from Customer Accounts

According to FINRA, they have received numerous reports of customers losing funds to theft due to instructions that were emailed to firms from customer email accounts indicating a desire to transmit or withdraw assets from their accounts.

FINRA issued this special alert notice to focus on customer account protection and to highlight relevant rules and notices including NASD Rule 3012 (Supervisory Control System) and Incorporated NYSE Rule 401 (Business Conduct) that “require all firms to establish, maintain, and enforce written supervisory control policies and procedures that, among other things, include procedures that are reasonably designed to review and monitor the transmittal of funds or securities”

FINRA suggests that firms revaluate their risks, policies, and procedures regarding customer assets in order to better protect their customers from having their assets stolen. The Federal Bureau of Investigation (FBI), Financial Services Information Sharing and Analysis Center (FS-ISAC) and Internet Crime Complaint Center (I3C) have also released a joint fraud alert discussing a similar situation of stolen client assets.

Click here to read the complete FINRA Regulatory Notice 12-05: Verification of Emailed Instructions to Transmit or Withdraw Assets from Customer Accounts.

Quest CE Announces their New FINRA Course Offering: Privacy Considerations: Conducting Business with Institutional Clients

Quest CE, premier provider of insurance continuing education and FINRA Firm Element Training, announces their newest, FINRA course offering that addresses the two distinct privacy considerations that institutional sales representatives may encounter in the day to day business activities. The most important of these is protection of private information and maintaining customer privacy to the highest degree in all situations. This course provides case studies and interactive activities that provide representatives with a chance to put the important concepts into action.

Click here to view Quest CE’s 2012 Firm Element Catalog with over 40 new Quest CE and FINRA offered continuing education courses

Quest CE Announces the release of their 2012 Firm Element Course Catalog

Quest CE, premier provider of insurance continuing education and FINRA firm element training, is proud to announce the release of their 2012 Firm Element Course Catalog. Not only was Quest CE the first in the industry to release their 2012 course catalog, they also added over 40 new courses to their robust course library. The Quest CE Firm Element Course Catalog includes Quest CE industry authored and FINRA authored firm element and Anti-Money Laundering courses.
 
Quest CE offers extensive training programs to keep you up-to-date on the latest regulatory requirements, trends and recommendations. With both online and instructor led learning, Quest CE has a wide variety of courses that will meet your specific training needs.
 
Click here to view Quest CE’s 2012 Firm Element Course Catalog