by Jerry Gleeson, Senior Editor at Registered Rep. Magazine. Posted on May 16th, 2012
Having your own radio program isn’t an essential element of an advisor practice acquisition at United Capital Financial Partners. But as both sides of United’s latest deal put it, it didn’t hurt, either.
The national RIA in Newport Beach, Calif. said today it has bought Steven L. Pomeranz Financial Management in Boca Raton, Fla., a practice with $200 million in assets and about 140 family relationships. Pomeranz has been in the RIA business for 16 years and in the radio business for 11 years—he produces “On the Money! With Steve Pomeranz,” a weekly program of financial advice and interviews that’s carried by nine stations in Florida, California, New York and Tennessee.
Pomeranz and Jason Del Col, United Capital’s senior vice president of advisory services, maintain the sale would have gone ahead without Pomeranz’s radio presence. But United plans to put the show to use in its national marketing plans—United plans to place the show in other markets in the nation where it has member advisors as a way of driving new investor traffic, and possibly recruit more advisors as well.
Pomeranz, 60, is United Capital’s sixth advisor practice in Florida. The firm is still determining which markets to enter, Del Col said.
“Our objective is to look at where we’ve got strong offices with plenty of capacity. I wouldn’t put a number on it,” he said. “We look at expansion in Florida and going into a few more markets around the country as step one, and take it from there.”
United Capital CEO Joe Duran will appear occasionally on the program, and possibly other United advisors. The radio show also will help promote United Capital’s proprietary practice management tools, including its advisor-client communications exercise called Honest Conversations, and Money Mind Analyzer, a Web application that helps clients understand their feelings about money.
Pomeranz said he already discussed those tools on a program last month.
Radio has helped grow Pomeranz’s practice from $30 million in AUM 10 years ago to $200 million today, he says. His program generates about 10 to 20 leads a month. He had no ratings statistics—eight of the nine stations that carry it are with National Public Radio—but he estimates the program has 10,000 to 15,000 listeners a week in south Florida.
“The marketing role of an advisor is to differentiate, and you need to break through the noise. You’re competing against large outfits with 10,000 or 20,000 registered reps all going out and joining Rotaries and churches and so on to get business,” he said. “The idea of going into radio turned out to be fantastic. People hear you week after week, they hear your investment philosophies, they get to almost feel they know you personally. It’s very, very powerful.”
He got involved in the medium at the behest of a PR firm he hired. He described the early programs as “very raw, very shaky,” but the polish grew. In recent years his guests have included members of Congress, a former governor of the Federal Reserve, and presidential candidate Ron Paul, who debated the merits of gold investing with him two years ago.
The decision to join United came because he had come to a crossroads, he said. He had a staff of four and he didn’t think he could grow without hiring more advisors and building out a larger firm, developments that would have him serving in more of an administrative capacity.
United provides him with human resource and investment strategy services, which frees him to focus on other parts of his business—including the radio rollout.
This is United’s third acquisition this year. The firm now has 38 offices around the country and $5.5 billion in assets under management ($14 billion in assets under advisement.)
by Jerry Gleeson, Senior Editor at Registered Rep. Magazine. Posted on May 10th, 2012
Ron Rhoades, the newly-elected chairman of the National Association of Personal Financial Advisors, minces no words when expressing his displeasure at the possibility of FINRA overseeing registered investment advisors.
Here are some recent tweets he posted (@140Limited) during NAPFA’s annual conference in Chicago (#NAPFA2012) going on this week:
The BIG GORILLA called FINRA wants to “regulate” all (both SEC and state-registered) RIAs. In reality – BDs want to destroy trusted advisors.
FINRA, a “self-regulatory organization” (SRO) wants broker-dealers to regulate investment advisers. Kinda removes the “self” from SRO.
TIME FOR ACTION. Join Financial Planning Coalition in opposing FINRA takeover of (and destruction of) trusted advisors.
Sounds like a man with a mission.
Rhoades takes over as chairman on Sept. 1, succeeding Susan John, who held the post for two years. He’s had a busy career. A Florida-based attorney for more than 25 years, Rhoades specialized in estate and tax planning and representing business clients. He was co-owner of a Florida RIA and obtained his CFP in 2005.
His most recent career move involved trading Florida for upstate New York. Last August he joined the faculty at Alfred State, where he chairs the financial planning program. Rhoades still has his hands in financial planning, running a new RIA, ScholarFi Inc., serving select East Coast clients.
(My apologies to Susan John, whose name I misspelled in an earlier post.)
by Jerry Gleeson, Senior Editor at Registered Rep. Magazine. Posted on May 9th, 2012
The National Association of Personal Financial Advisors is climbing aboard the marketing train that is attracting so many other FA organizations looking to broaden their appeal to a national investor audience.
The group, in the midst of its annual convention this week in Chicago, said today it’s launched FeeOnlyNetwork.com, a website that promotes its 1,500 member advisors. NAPFA partnered with Advisorology LLC, which built and owns the site.
Investors can find NAPFA advisors using search tools on the group’s own website, napfa.org, but they would have to know about the site’s existence first before they could use it. FeeOnlyNetwork.com is search engine optimized, so investors doing Internet searches can more easily track it down.
All NAPFA members get a free profile on the site; those who want a more sophisticated profile that includes video and other features have to pony up $295.
The new site launch comes just a month after NAPFA launched a national radio and Internet ad campaign to promote its membership. It’s a relatively modest budget—$200,000, NAPFA spokesman Ben Lewis says, which buys 30-second spots on consumer advocate Clark Howard’s radio show, plus banner ads on his website and the site of National Public Radio through the end of this year.
The ad messages? “No commission, no confusion,” and “Our only special interest is you.”
With more than 60,000 members, the Certified Financial Planner Board of Standards has deeper pockets. Last year it launched a four-year, $40 million ad campaign across multiple media platforms to promote its CFP designation. (It also raised membership fees to cover the cost.)
And last fall Charles Schwab unveiled an ad campaign to promote the registered investment advisor channel, with the theme, “RIA Stands for You.” One industry observer estimated Schwab spent a few million on the effort.
Building a national audience for RIAs also is on the agenda of Advizent, a startup launched this spring by Steven Lockshin of Convergent Wealth Advisors and Charles G. Goldman, a former institutional services exec at Schwab and Fidelity Investments. Goldman estimated that Advizent would have to spend $30 million to $50 million for an effective national ad campaign to brand the company with investors.
by Jerry Gleeson, Senior Editor at Registered Rep. Magazine. Posted on May 7th, 2012
Entrepreneurs take risks, and energy entrepreneurs go them one better. When former Merrill Lynch private banking advisors Dane Crunk and Chad Clary in Midland, Texas decided to go independent last week, Crunk said, it helped to have clients in that particular field.
Their new RIA multi-family office practice is Syntal Capital Partners. They expect to bring over the two dozen families they had at Merrill, “all risk-takers,” as Crunk, 30, put it.
“They all appreciate where we’re at right now,” he said. “You work with people who tend to inspire you, and they’re all entrepreneurs. I think the idea of owning your own business and being able to take care of them through true open-architecture platforms has always been appealing to us.”
Crunk and Clary, 37, worked with wealth management platform service provider Dynasty Financial Partners in New York City to set up their new practice. Fidelity Investments and Pershing Advisor Solutions will provide custody and clearing services.
This latest deal gives Dynasty, which launched more than a year ago, 12 advisory firms with $11.5 billion in assets, President and CEO Shirl Penney said. He expects to have 20 teams on board by year’s end, with a goal of 100 teams and assets north of $100 billion in the next five years.
Clary joined Merrill in 1998 and Crunk followed two years later. In 2006, they joined Merrill’s Private Bank and Investment Group. Their new practice opened May 4.
Both attended the Wharton School of Business and obtained CIMA designations. Crunk said he wasn’t originally keen on the idea of independence because he wasn’t sure they could pull off the sophisticated financial activities that their clients needed, such as over-the-counter trades, hedging transactions, and commercial lending. Discussions with Dynasty led him to conclude it was doable.
“Once you see how business can be done, you feel like your hand’s forced,” he said.
Syntal, by the way, means “synergizing talents,” Crunk said.
by Jerry Gleeson, Senior Editor at Registered Rep. Magazine. Posted on May 3rd, 2012
Amid the generally lackluster asset-gathering performance of advisor channels in 2011, RIAs showed striking resilience, a report out today by Aite Group notes.
Independent RIAs and self-clearing retail brokerages were the only two segments of the business that grew client assets last year, Aite said. The RIA channel showed assets under management at year-end of $1.6 trillion, an increase of 3.3 percent. (The figure still falls considerably short of 2010 growth of 16 percent.)
The self-clearing brokerages topped the list with growth of 3.9 percent from 2010, for a total of $2.1 trillion in AUM.
The growth occurred despite the repeated hammering of retail investors since the 2008 crash, Aite said—upsets that included the spring 2010 flash crash and the Euro debt crisis of 2011. Part of the reason clearly is the migration of advisors and their clients out of competing channels.
Wirehouses are still the 800-pound gorilla in the industry, with more than $5 trillion in assets at year-end. But that figure was off by 2.2 percent. Fully disclosed retail brokerages and online and discount brokerages also were down, 1.1 percent and 0.6 percent respectively.
The RIAs and self-clearing B/Ds have seen their market share increase every year since the 2008 crash, Aite says. Client assets industrywide were $13.4 trillion at year-end, down a bit from $13.5 trillion a year earlier. RIAs accounted for 12 percent of the 2011 total.
Slower growth afflicted the big players in the RIA custodian business as well, Aite noted. Charles Schwab and Fidelity account for nearly 75 percent of the RIA market; Schwab assets were up 4 percent to $679 billion at year’s end, while Fidelity grew a scant 0.5 percent, to $502 billion.
TD Ameritrade has far fewer RIA assets in comparison but put up sharply greater growth—22.8 percent, Aite said, to $142 billion. Online brokerage Scottrade followed the same pattern; it had RIA assets of $35 billion, an increase of 45 percent. (Update: on May 7 a Scottrade spokesman disputed the $35 billion figure but didn’t offer a different number.)
Pershing today said it tracked eight deals with assets under management totaling about $14 billion. That’s just one deal greater than those that were closed in the fourth quarter of 2011, but the AUM is nearly seven times larger, Pershing said.
Nearly half of the firms had $1 billion or more in assets, it added. Median AUM was $544.5 million, up more than three times the level seen in the sequential quarter.
The last quarter didn’t set records. The market saw bigger AUM in deals in the third quarter of 2011—about $15 billion. Pershing tracks deals with AUM of at least $50 million, or $500,000 in revenue.
The biggest deal last quarter was AMG Wealth Partners’ equity stake in Veritable LP, a wealth manager with more than $10 billion in AUM and a mainstay on many “Top RIA” lists in the industry’s media.
Banks, which had sat out the RIA merger market for a while, also are creeping back in. Pershing noted that Bryn Mawr Bank last quarter acquired Davidson Trust Company, with $1 billion in assets. A year earlier it had bought Hershey Trust Company.
Here’s Pershing’s data for the previous five quarters:
by Jerry Gleeson, Senior Editor at Registered Rep. Magazine. Posted on May 1st, 2012
Sponsors of 401(k) retirement plans who worry when employees borrow from the savings vehicle have a solution, but it comes with a price, a new report by Vanguard says.
The solution: limit the employees’ ability to borrow, Vanguard suggests. The price: the very ease of borrowing from their 401(k) plans is a big reason why employees sign up for 401(k)s in the first place; lending restrictions may leave workers cold to the idea of saving for retirement.
The report, “Diversity and defined contribution plans: Loans and hardship withdrawals,” focused on racial and ethnic patterns in borrowing. Vanguard studied seven large defined contribution plans over 12 months ending June 30, 2010. It found that 17 percent of active participants had tapped their savings either through loans or hardship withdrawals during that period.
Blacks were 55 percent more likely than whites or Asians to take loans, while Hispanics were about one-third more likely. However, blacks and Hispanics borrowed only a bit more than those in other groups, Vanguard said, and there was no meaningful difference in default rates among any groups.
The study said the differences in borrowing patterns might be attributed to factors beyond the researchers’ ability to measure—an inability to borrow outside of the 401(k) plan, for example, or differing levels of financial literacy.
Since the incidence of 401(k) borrowing increases when sponsors permit multiple loans, Vanguard researchers suggested that workers be limited to one loan outstanding. That practice appeared to reduce borrowing across all racial and ethnic groups, the researchers said.
There’s a tradeoff, the report says, since the loan feature encourages people to participate in 401(k). Even those workers in the plan who take a loan or hardship withdrawal “are likely to be better prepared for retirement than their fellow workers who don’t participate and have no retirement plan savings,” Vanguard said.
Meanwhile, some good news today for those who follow 401(k) fortunes: Fidelity Investments said its average 401(k) balance at the end of the first quarter rose 8 percent from the end of 2011, to $74,600.
About 80 percent of the increase was attributed to the strong stock market performance in the quarter, while the rest was chalked up to higher contributions by both workers and plan sponsors. Noted: the number of participants in programs that automatically increase the contributions to 401(k) plans annually are up ninefold in the past five years.
by Jerry Gleeson, Senior Editor at Registered Rep. Magazine. Posted on April 27th, 2012
One of the topics at this morning’s Investment Adviser Association’s annual meeting in San Francisco was advisor use of social media. I’ll be writing in more depth on this discussion later on, but here are the takeaways from the four panelists:
W. Hardy Callcott, partner at Bingham McCutchen LLP: “On the legal compliance side, the key things are how do you supervise it and how do you retain it. Think through the technology issues of that at the outset because once you start it, it’s hard to go back and bootstrap in. Make sure you have systems that support what you need to do from a regulatory perspective.”
David Edwards, president of Heron Capital Management: “Make sure your overall marketing strategy is rock-solid, and then craft your social media strategies to support that marketing strategy.”
Wendy L. Harrington, executive vice president, global marketing services at Franklin Templeton Investments: “If you haven’t started yet, you want to go onto LinkedIn, get your profile up, join a discussion group, and just look and observe how it works. And then you can figure out how you would like yours to operate.”
Lee Kowalski, principal at kasina: “I would say don’t let compliance be a crutch or a regulatory excuse for not doing social media. We do an annual report on social media trends and best practices. And the percentages are decreasing, but the number-one obstacle (that firms give for why) they’re not active is, ‘Compliance won’t let us. We’re worried about compliance.’
“The reality is, every firm wanting to explore this space has been able to find ways to do it in a compliant fashion. The regulations are behind, but they’re catching up. They see this is the wave of the future. … This isn’t a fad. We might not be talking about Twitter or Facebook or LinkedIn five years from now, but we’ll certainly be talking about interacting with our customers in a way that’s very different than we were five or 10 years ago.”
by Jerry Gleeson, Senior Editor at Registered Rep. Magazine. Posted on April 26th, 2012
How many laughs can a finance professor get at an investment conference? Quite a few, it seems.
Meir Statman, author of “What Investors Really Want,” led off today’s programs at the Investment Adviser Association’s annual conference in San Francisco. Statman supplements his discussion about the ways investors betray their best interests with plenty of visual aids, chiefly commercials and film clips from TV programs.
“We have to look at the world as it is,” he told the audience as he segued into a clip from Jim Cramer’s “Mad Money” TV program. It’s the typical shtick—Cramer jumping up and down, setting off bells and whistles and shrieking at the start of his famed Lightning Round of stock analyses. “Are you ready SKEEEEE-DADDY!”
Statman has a comedian’s timing. He pauses a beat at the end of the clip. Then he deadpans in his accented English, “There must be some kind of diagnosis for this condition.
“If that’s your idea of entertainment, enjoy. But buying shares based on that?”
Shortly afterward he shows an iconic E*Trade baby commercial; the infant confidently assures the viewers about the ease of stock trading, and then promptly suffers a fit of baby puke.
“E*Trade gives you all you need to throw up all over your portfolio,” Statman concludes.
His point is that investors are influenced by the world around them, and by what’s in their subconscious. It’s difficult for people to dismiss their intuition when making decisions, even when the weight of evidence points to decisions at odds with their hunches.
The role of the advisor is to serve not only as the investor’s wealth manager, but also as the investor’s well-being manager, Statman says. That means understanding what’s important to the investor, what drives the hopes and fears.
As Statman says, you don’t want to be the advisor who tells a client who’s distraught over market results, “What are you complaining about? I put you on the efficient frontier.”
by Jerry Gleeson, Senior Editor at Registered Rep. Magazine. Posted on April 24th, 2012
RBC has gotten kudos over the years for efforts at diversifying its work force. In 2010, Catalyst, the national nonprofit that promotes women’s opportunities in business, recognized RBC for its inclusion efforts across a broad range of corporate activities, including recruitment and mentoring.
Mary E. Zimmer
Despite the management initiatives, however, just 13 percent of the 2,000 advisors in RBC’s Private Client Group are women. That falls short of the mid- to upper teens percentage that’s the market average, says Mary Zimmer, RBC’s head of International Wealth-USA and Correspondent and Advisor Services for RBC Wealth Management-U.S.
The goal now is to get the figure up to 20 percent in the next three to four years, she says. Part of the plan is greater inclusion in RBC training programs, where last year women made up 40 percent of enrollment. There’s also greater promotion of advisor team formation, which is seen as a way to open more doors.
There’s also pressure from the top—specifically, RBC CEO Gordon Nixon, who sits on the bank’s global diversity council. “Stop talking about it; start doing something about it,” is his message, says Zimmer, who’s also on the council.
The industry has been slow to change, she concedes.
“I think we need to increase the sense of urgency,” she says. “It’s not always an inclusive culture. I think at times there’s skepticism over whether firms are really committed to long-term change around making a difference in this area.”
Zimmer thinks history is on her side this time, however. Women are assuming growing control over global wealth; an Allianz study found women own 40 percent of all privately-held businesses, and own 20 percent of $1 million+ businesses. Their share of educational and professional degrees is growing.
“I really believe it will be a different industry five or 10 years from now,” she says.
