Skip to Main Content
SUBMIT A TIP RECEIVE DAILY NEWS
Menu AdvisorHub
  • News
      • Latest News
          • Walmart bankWalmart Hires Two Goldman Execs to Oversee Expansion into Financial Services
          • Morgan StanleyMorgan Stanley’s Recruiting Loan Balance Jumps Back Above $3 Billion
          • Advisors moving to FloridaMerrill to Ramp Up Private Wealth Business in Florida
          • Merrill advisors Alpesh R. Patel, Matthew Birkett and Darren Siegrist moved to Rockefeller along with client associates Hai Dang and Chris Iwamasa.Merrill Loses $3-Mln Team to Rockefeller in CA, $2-Mln Group to Texas RIA
        • Close
      • Advisor Moves
          • Merrill advisors Alpesh R. Patel, Matthew Birkett and Darren Siegrist moved to Rockefeller along with client associates Hai Dang and Chris Iwamasa.Merrill Loses $3-Mln Team to Rockefeller in CA, $2-Mln Group to Texas RIA
          • Bonus for financial advisorRayJay Details Recruiting Offer Hikes, Drops Some Clawback Provisions
          • Montgomery, Alabama.Merrill Lifer and His $4.4-Mln Alabama Team Jump to Morgan Stanley
          • Advisor considering independenceExclusive: Rockefeller Lures Merrill Private Wealth Regional Head in Chicago
        • Close
      • Enforcement
          • Dining expenseFinra Dings Ex-Morgan Stanley Broker in Los Angeles over Expense Lapse
          • Judge rulesFinra Bars Ex-Wells Broker Who Raised $3.5-Mln For Software Company
          • Advisor fraudFinra Suspends Former NJ Broker Who Borrowed from Clients to Pay Debts
          • Finra rulingArbitrator Grants Ex-Merrill Bank Broker’s Expungement, Calls Firing ‘Reckless’
        • Close
      • Markets
        • `Nothing Safer Than Cash’: Tech Rout Puts Silicon Valley on Edge
        • ‘Any News Is Bad News’ as Earnings Fail to Save Equity Bulls
        • ‘50 Cent’ Profited From Volatility Jump, Wells Fargo Says
        • ‘Beaten Down’ ETF Is a Way to Play Inverted Curve, BofA Says
        • Close
      • Opinion
          • Opinion-How-Will-The-Coronavirus-Affect-The-Stock-Market-Opinion: Coronavirus – What Advisors Need to Know
          • opinion-investors-conquered-fees-next-up-is-their-own-behaviorOpinion: Investors Conquered Fees but Not Their Own Behavior
          • Investor-Confidence-In-Stocks-Rightly-Declines-Opinion-772x485Investor Confidence in Stocks Rightly Declines: Opinion
          • Opinion-Schwabs-Zero-Commission-Decision-Challenges-Its-Ria-ClientsOpinion: Schwab’s Zero Commission Decision Challenges Its RIA Clients
        • Close
      • Fintech News
          • Fintech Cryptocurrency ClearingFintech Firm Apex Clearing Agrees to Go Public Via SPAC
          • System outageMerrill Systems Hiccuped on Thursday as Stocks Slid
          • 7 dollar rolls‘The Rock’ Invests in Finance App Acorns, and New Users Get $7
          • TraderHigh-Frequency Traders Love Business With Robinhood
        • Close
      • From the Publisher
          • 2021 PredictionsFrom the Publisher: Sirianni’s Predictions for 2021
          • Josh Rogers – 772×485Seven Questions with Tony Sirianni: Josh Rogers, Founder and CEO, Arete Wealth
          • Phil Hildebrandt — 772×485Seven Questions with Tony Sirianni: Phil Hildebrandt, Principal, CEO of Segall Bryant & Hamill
          • Christian Hyldahl, President of Varium Investment Partners-772×485An AdvisorHub Interview with Christian Hyldahl, President of Varium Investment Partners
          • John Peluso – 772×485Timely interview with John Peluso and AdvisorHub CEO Tony Sirianni
          • Louis Dworsky Coronacrash Interview-772×485Coronacrash Update: Hayden Royal’s Louis Dworsky & Tony Sirianni
          • Stratos_Jeff pic.jpg-772×485Coronacrash Update: Stratos Wealth Partners’ Jeff Concepcion & Tony Sirianni
          • coronacrash ben harrison – 772×485Coronacrash Update: BNY Mellon | Pershing’s Ben Harrison & Tony Sirianni
        • Close
    • Close
  • Deals & Comp
  • Recruiting Wire
  • Breakaway Center
  • Resources
    • resources-home-menuResources Home
    • PRACTICE MANAGEMENT RESOURCESPractice Management Resources
    • Transition ResourcesTransition Resources
    • Fintech ResourcesFintech Resources
    • menu fintechFintech Product Directory
    • Menu-Institute-772×485Institute
    • Boutique Wealth AdvisorsBoutique
    • EventsEvents
    • Asset Manager Hub
    • Close
  • AdvisorHub TV
  • Podcasts
  • RIA Center
  • Virtual Summit
close X
May 8, 2020

SEC’s New Reg BI Care Standard Challenges Asset Management Platforms

by Vicky Ge Huang
|
News
|
SEC
|
No Comments
Share This
SUBMIT A TIP
SEC
Chip Somodevilla/Getty Images

Firms that offer turnkey asset management programs (TAMPs) to independent brokers outsourcing investment management could be pressured by the Securities and Exchange Commission’s new Regulation Best Interest standard, some TAMP executives said this week.

Reg BI, which becomes effective on June 30, aims to prohibit brokers from placing their financial interests ahead of retail customers when making investment recommendations in commission accounts.

Some investor advocates and registered investment advisors who are subject to higher customer care standards than brokers have criticized Reg BI as weak, arguing that brokers can comply largely by simply disclosing conflicts of interest in documents that few investors read. 

TAMPs, whose primary customers are financial planners and independent brokers, say Reg BI will pressure brokerage firms to choose their third-party firms on a much more qualitative basis geared to customer value than currently.

“It will be very difficult for those broker-dealers that are compensating advisors for one platform versus another to continue to do that,” AssetMark Financial Holdings Chief Executive Charles Goldman told analysts after the company reported a 24.5% jump in first-quarter revenue and a 39.2% rise in adjusted net income. 

“I think it’s pretty clear that most broker-dealers are going to eliminate those kinds of practices,” he said in a follow-up interview with AdvisorHub. 

TAMPs and other third-party providers are inherently challenged by Reg BI’s strictures, which require brokerage firms to calculate and document the reasons for recommending one investment or investment platform over another, industry consultants said.

“If you bring in a third party, you bring in another person to get paid,” said Scott Smith, director of advice relationships at Cerulli Associates, which consults with asset managers on distribution of their funds. “It may be incrementally more expensive, and you have to make sure that the merits are strong enough to warrant the extra cost.”

The key is for the smaller broker-dealers that are TAMP customers to marshall evidence showing that their internal investment platforms are not as strong as what they can get from outsiders such as AssetMark, Envestnet, SEI, Orion, and Riskalyze, Smith said.

AssetMark’s Goldman, a former head of Charles Schwab’s custody business for registered investment advisers, said he welcomes the more rigorous customer-care standard.

“That is a good thing,” he said. “It means that we’ll have to compete on the merits, the quality and the economic experience for the end investor as opposed to paying the advisor.”

TAMPs can help their brokerage customers marshall evidence of the value of a well-rounded platform that integrates asset management with other financial planning and administrative functions, said consultant Greg O’Gara, a senior research analyst at Aite Group’s wealth management practice.

“If the TAMP is part of a broader centralized broker-dealer platform itself, it is a valuable tool for advisors and broker-dealers to help them manage through Reg BI,” O’Gara said. “A platform that allows for better integration of advisory tools, and a centralized overlay for compliance and regulatory technology, is going to be the preference.”

The coronavirus crisis that has forced advisors to shelter at home and introduced extraordinary market volatility may paradoxically help TAMPs attract more business, according to some executives.

“Independent advisory firms won’t go into a remote environment without all the infrastructure to connect and collaborate in a way that larger companies can,” Bill Crager, chief executive of  Envestnet said Thursday after the company reported a 61% jump in first-quarter adjusted net income to $31.2 million on revenue that rose 23% to $246.5 million.

Envestnet, the largest TAMP with $185 billion of assets under management, recently launched a venture with Dynasty Financial Partners, which contracts with RIAs to provide a range of practice management, trading and financing services. (Envestnet also took a minority stake in Dynasty). 

“I think there’ll be more and more outsourcing to things like finance support, marketing support, compliance support, and other services that we’re driving around our advisory services exchange,” Crager told analysts.

Shares of Envestnet, which are down 4.3% this year, were up 8.6% in afternoon trading on Friday.

Shares of AssetMark, the third largest TAMP with $56 billion of assets under management as of March 31, are down about 15.6% year-to-date. They inched up 0.52% in afternoon trading on Friday.

Like this article? Let AdvisorHub come to you!  Sign up

Share This
No Comments

Leave a Reply Cancel reply

Tony Sirianni Podcast Banner

CORONACRASH NEWS

  • Big U.S. Banks’ Vows to Halt Job Cuts End as Virus Endures

    Big U.S. Banks’ Vows to Halt Job Cuts End as Virus Endures

    Feb 26, 2021
  • Raymond James Executive: We’re Open to Flexible Work Arrangements for Advisors

    Raymond James Executive: We’re Open to Flexible Work Arrangements for Advisors

    Feb 25, 2021
  • Finra Bars Ex-Wells Broker Accused of Improperly Seeking Virus Relief Loan

    Finra Bars Ex-Wells Broker Accused of Improperly Seeking Virus Relief Loan

    Feb 12, 2021
  • RayJay Private Client Profit Dips 8%, Employee Channel Recruiting Slips

    RayJay Private Client Profit Dips 8%, Employee Channel Recruiting Slips

    Jan 28, 2021
  • Finra Scrutinizes Brokers Who Took PPP Loans for Potential Violations

    Finra Scrutinizes Brokers Who Took PPP Loans for Potential Violations

    Jan 25, 2021

NEWS

  • Walmart Hires Two Goldman Execs to Oversee Expansion into Financial Services

    Walmart Hires Two Goldman Execs to Oversee Expansion into Financial Services

    Mar 1, 2021
  • Morgan Stanley’s Recruiting Loan Balance Jumps Back Above $3 Billion

    Morgan Stanley’s Recruiting Loan Balance Jumps Back Above $3 Billion

    Mar 1, 2021
  • Merrill to Ramp Up Private Wealth Business in Florida

    Merrill to Ramp Up Private Wealth Business in Florida

    Feb 28, 2021
  • Merrill Loses $3-Mln Team to Rockefeller in CA, $2-Mln Group to Texas RIA

    Merrill Loses $3-Mln Team to Rockefeller in CA, $2-Mln Group to Texas RIA

    Feb 26, 2021
  • Finra Dings Ex-Morgan Stanley Broker in Los Angeles over Expense Lapse

    Finra Dings Ex-Morgan Stanley Broker in Los Angeles over Expense Lapse

    Feb 26, 2021

Recruiting Winners: 2020 Year in Review

FINANCIAL INDUSTRY PODCASTS

AllIndependence
The must listen-to podcast for financial advisors by Tony Sirianni. Guests to include:
-Ron Kruszewski
-Shirl Penney
-Penny Pennington
-Eric Clarke
and many more
Michael Kitces and Carl Richards discuss financial advising topics.
The “new advice value stack,” and how firms can use it to help maximize their own value propositions for their clients.
Interviews and insights for advisors curious about switching to a new broker dealer.
The Brighthouse Financial Insights Panel is a group of leading, independent experts providing powerful insights into the big challenges facing you and your clients.
Powering Independence Podcast, insights and ideas for RIAs, presented by Dynasty Financial Partners. A podcast dedicated to presenting fresh ideas and best practices for the wealth management industry.
As an industry expert, Frank LaRosa provides guidance and advice on a host of topics from recruiting and transitions, succession planning, practice management, M&A and more.
Our goal is to unlock the challenges to reveal the opportunities and what it means to provide advice in the 21st century.
Go behind the scenes with registered investment advisors and other related independent business model experts
As a nationally recognized recruiter and consultant to financial advisors, Mindy Diamond has unmatched experience in introducing advisors to the independent space.
The must listen-to podcast for investors, venture capitalists and financial advisors, with Tony Sirianni and Paul Dietrich.
An Introduction to Independence: 5 Key Episodes to Jumpstart Your Knowledgebase
Jay is an investment strategist, CERTIFIED FINANCIAL PLANNER™ and business consultant to financial advisors.
We interview top financial advisors and visionary voices to bring you the strategies, tips, and tools you need to make a difference in people’s lives.
A financial literacy and commentary show that features a number of investors, financial experts, professional athletes, business owners and more.
Join Sound Financial Group CEO Paul Adams and President Cory Shepherd every week, as they help you Design and Build a Good Life™.
The Kuderna Podcast, focusing on wealth in it's original meaning- a state of well being.
Timeless wisdom, actionable information you can use right now to make smarter investment decisions.
Made for and dedicated to those folks serious about their financial plan.
Suzanne Siracuse asks the questions nobody else asks, as influencers and interviewer collide in her new and truly unique podcast series The Big Reveal.
Our webcast is dedicated to helping our viewers get real insights by avoiding the cognitive dissonance of today’s media outlets and biased editorial filters.

Latest News 
Advisor Moves 
Enforcement 
Opinion 
  • About Us
  • Contact Us
  • Advertise
  • Events
  • Careers

 get our newsletter

Industry focused content and breaking news.

SIGN UP

Contact Us

EMAIL US
1707 Post Oak Blvd.
#484
Houston, TX 77056

© 2021 AdvisorHub
  • |Terms of Use
  • |Privacy Policy
  • |Advertise
  • |Careers
  • Facebook
  • Linkedin
  • Twitter

Back to top