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New Study Links Private Equity Ownership to Advisor Misconduct

13:54 10 January in In the News by rafferty

January 6, 2022 By Diana Britton, WealthManagement.com Registered investment advisory firms that take on private equity owners are likely to see higher rates of advisor misconduct after the buyout, according to a study released late last month by the University of Oregon. The researchers found that private equity–backed RIAs had a 147% increase in the percentage of their advisors committing misconduct and 200% increase in the average number of misconduct incidents after the ownership change. Those results were driven mostly by regulatory conduct and customer disputes, the study said. The rate of misconduct is even greater at firms with higher post-buyout growth in assets under management per advisor, and the study notes that it’s concentrated at firms serving retail clients. The results of the study suggested that private equity firms target RIAs with cleaner...

‘Upfront Money Should Be a Spice, Not a Main Course’: Recruiter Jon Henschen

20:06 03 January in In the News by cristi.barkley@gmail.com

December 30, 2021, By Jane Wollman Rusoff ThinkAdvisor To a large extent, [broker-dealers] are just forgivable note peddlers. That’s their primary sales pitch when they talk to advisors — what we’ll give you if you move,” argues recruiter Jon Henschen, in an interview with ThinkAdvisor. “Upfront money should be a spice, not a main course,” says the founder of Henschen & Associates. “That should not be a primary motive for moving, by any means.” Henschen also has a strong view about BDs who mark up outside money managers’ fees, which are paid by the client. The advisors typically aren’t aware of “the manipulation,” he says. “Some of the firms are getting downright abusive in their markups. The broker-dealers certainly make things opaque and hidden,” he notes. Henschen opened his firm in 2001 and is nowadays...

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Midsize wealth manager allegedly missed assistant’s fraud for 7 years

16:25 16 December in In the News by rafferty

December 15, 2021 By Tobias Salinger, FinancialPlanning.com One wealth manager had a financial advisor and a sales assistant who defrauded their clients in separate schemes while operating out of the same office, according to investigators. Midsize independent broker-dealer American Portfolios Financial Services agreed to pay $225,000 under a Dec. 10 settlement with FINRA about its supervision of the office. The Holbrook, New York-based brokerage with 892 registered representatives has paid restitution of $383,000 to clients who lost money through the conversions of the former assistant, Kimberly Sredich, as well as settlements totaling $575,000 to ex-customers of barred rep Mark L. Hopkins, according to FINRA BrokerCheck and documents filed in Michigan’s Eastern District. Sredich began her two-year federal prison sentence in late September after pleading guilty to money laundering and conspiracy to commit wire and mail fraud. Read...

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5 Reasons Going RIA Beats the IBD Model

19:58 05 December in Articles Written by Jon Henschen by rafferty

November 30, 2021 By Jon Henschen, ThinkAdvisor Two primary threats to independent broker-dealers are advisors retiring or going the RIA/dual-clearing route. Even though many broker-dealers have become friendly to advisors who to want operate with a hybrid approach, many of the larger BDs have been shutting the door to dual clearing, which generally lets advisors custody advisory assets with the BDs’ own clearing firm(s) and at TD Ameritrade, Schwab, Fidelity Institutional Wealth Services (IWS) or Interactive Brokers. Broker-dealer profit motives are the primary driver of the split from dual clearing since assets held with their own clearing firm are far more profitable than those held outside of it. With certified financial planners now required to uphold a fiduciary standard of care for client investments, we see a clash of interests that will further drive advisors to go RIA and hold advisory assets outside...