Financial Advisor Marketing & Technology

Marketing & Technology For Independent Financial Advisors

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Archive for January, 2010

Schwab Performance Technologies Q&A

At a recent session of the Financial Advisor Webinar Series, Mike Williams of Schwab Performance Technologies (SPT) talked about what developments in PortfolioCenter and PortfolioServices.

While we usually don’t invite vendors to talk about their products at our webinars, we made an exception because Schwab is so influential; SPT is used by 3,300 advisory firms and its parent provides custodial services to 6,000 RIAs.

Despite allotting 25 minutes for questions, attendees at the session had more questions than Williams could answer. So we passed along to Williams the unanswered questions chatted in by attendees. In this post, Williams answers those questions.

Do you use ByAll Accounts to connect to custodians that you do not have direct interfaces with?
Yes. Both our PortfolioCenter and PortfolioServices products can leverage ByAllAccounts to acquire account information from financial institutions with which there is no available direct data feed.

When will the custom report enhancements you talked about at the webinar be available?
The first general release of the new report presentations will be in mid-2010. Subsequent releases will occur later this year and throughout 2011.

For the new graphical reporting: will a PortfolioCenter user need the Enhanced Reporting Module (ERM), and what is the cost of the ERM for a current PC user?
Yes, the new report presentations require a PortfolioCenter Enhanced license. The Enhanced Reporting Module is $1,500 year one and carries an annual maintenance fee of $500. Please contact SPT Sales at (800) 528-9595, option 2 for further information.

To see answers to 12 other questions, please sign into www.advisors4advisors.com.

FINRA Notice On Social Media Reveals Regulators’ Struggle

Guidelines issued by FINRA yesterday governing how registered reps use social media websites are constructive but highlight the challenge regulators face in structuring advertising rules that keep up with technology.

One can only cheer the suddenly enlightened view of FINRA in releasing the Notice. FINRA has stood silent for several years while social networking exploded. As the FINRA release points out, 46% of American internet users logged on to a social networking site in 2009.

With FINRA issuing no guidance as social media exploded in popularity in recent years, registered reps were absent from the online scene out of fear that they would break undefined rules. So FINRA in to be commended for finally bringing some clarity to this issue.

Where the guidelines go wrong and muddle the rules, however, is in an effort to distinguish “static” and “non-static” content.

To read the rest of my post, please sign up for membership at Advisors4Advisors.

A Magazine For People Named Fred

When I was in graduate school in 1978, one of the members of Monty Python Flying Circus was a guest lecturer at journalism school. He was there to talk about a parody paper he published called Not The New York Times. It was an exact replica of the real newspaper, but it was all fake news.

That summer, Pope Paul VI died and was succeed by Pope John Paul I, who died 33 days after being elected. This led the faux paper to write a fake news story saying the third Pope that month, "John Paul John Paul," died 18 minutes after he was elected. "Pope Dies Yet Again," read the headline, "Reign is Briefest Ever," said the subtext, which added, "Cardinals Return From Airport."

I am not sure whether the speaker was Graham Chapman or John Cleese. But I do remember clearly that he told us that the fake New York Times was a new business idea called custom publishing. "Someday, there will be a magazine called 'Fred,'" he said, "dedicated solely to people named Fred."

That line about Fred magazine has always stuck in my mind. As ridiculous as it sounded, the idea of personalized publishing tantalized me.

Thirty-two years later, I can tell you that Advisor Products is making that prediction a reality.

Client Portals from Advisor Products lets an advisor create a personal electronic newsletter for each individual client. You can profile each client as retiree, pre-retiree, or business owner, and you can choose from a list of topics that would interest each client from our list of 100 wealth management topics.

Those two settings determine which stories from Advisor Products' proprietary content library of hundreds of articles will appear on the client's personal web page. Those settings also filter the topics of wealth management articles we do not write but that we allow into the client's personal portal.

In addition, you can bring in RSS feeds about entertainment, sports, health, food, and myriad other topics from other websites.

Personalizing financial articles is only one small part of the Client Portal platform. It also integrates with many CRM, financial planning, and performance reporting applications and includes a personal vault for each client. To learn more, call us at 516 333-0066 ext. 223.

Power Of Social Media Seen In Haiti Earthquake

The tragic events in Haiti are being recorded and reacted to live on Twitter. To see the live feed, click here.

Text YELE to 501501 to give $5 for earthquake relief in haiti. Your cell phone will be charged $5.

Answers To Roth IRA Conversion Questions

At the Financial Advisor Webinar Series on December 11, Ben Norquist of Convergent Retirement Plan Solutions delivered a presentation that was highly rated by attendees about how advisors can seize the 2010 Roth IRA conversion opportunity.

Norquist showed a simple web-based application he developed that makes it easy for advisors to calculate complex conversion scenarios to show the net benefit of conversion.

The tool's strength is that it allows you to dynamically on-the-fly change variables affecting a client's conversion options. The variables include future tax rates, the amount of cash available to pay income taxes incurred on the withdrawal of assets being converted from traditional IRAs or qualified plans, the monthly withdrawals of the IRA owner for living expenses, what you'll earn on a traditional IRA that's not converted, required minimum distributions on the traditional IRA, and the amount left for beneficiaries.

While the software is a one-trick pony and is only good for Roth IRA conversion calculations, the opportunity to advise on Roth IRA conversions justifies the software’s $600 perpetual license fee. I don't believe any of the financial planning applications can make these dynamic calculations and illustrations on the fly, making it a great app to work with live in front of clients.

To receive CFP CE credit for this session and dozens of other webinars, please join Advisors4Advisors.

You can also see a replay of the session (without getting CE credit) at the Financial Advisor Webinar Series page on Advisor Products’ website.

At Norquist's session, we had more questions from attendees than we could answer. So Norquist sent me answers to some of the questions we did not have time for. Below are four of the 15 questions he sent me answers for. To see the rest of the Q&A, please join Advisors4Advisors.

Q: Does the five-year rule apply to distributions made from Roth Conversions after age 59½?
A: No. The five-year rule that applies specifically to Roth IRA conversion assets is only pertinent in situations where an individual under age 59½ takes a distribution of conversion assets within five years of the conversion transaction.

Q: Can an individual with a 401(k) plan convert even if he is still employed? Must the plan allow for in-service distributions? If allowed, can this be converted directly into a Roth IRA or must it first go into a traditional IRA?
A: A 401(k) participant can potentially take a distribution of 401(k) assets for Roth conversion purposes provided the plan he is covered under contains some type of in-service withdrawal provision. If an individual is able to request an "eligible rollover distribution" from his 401(k) plan, he can elect to roll over (i.e., "convert") the distribution directly to a Roth IRA without first going through a traditional IRA. (If the 401(k) distribution occurred during 2009, the individual would be subject to the $100,000 income restriction on Roth IRA conversions.)

Q: Can you address re-characterization options if the market should go down after the point of conversion?
A: The re-characterization option basically allows you to "rewind" a Roth IRA conversion and treat the transaction as if it never happened. In situations where the market value of your IRA assets declines following a Roth IRA conversion, the re-characterization option can provide you with the opportunity to undo your original conversion, thereby avoiding an income tax liability on the value of the assets at the time of original conversion. It should be noted that you cannot re-convert the same assets until the latter of a) January 1 following the year of original conversion, or b) 30 days following the date of re-characterization.

Q: What about the impact of estate taxes on Roth IRAs as Income in Respect of a Decedent?
A: Both traditional IRA assets and Roth IRA assets are included in a decedent's overall estate when assessing potential estate tax liability. Part of the beauty of Roth IRA conversion is that, by paying taxes up front, an individual is able to reduce the overall value of his or her estate, thereby potentially decreasing the amount of estate tax liability. While it is true that the beneficiaries of deceased traditional IRA holders are potentially eligible to take subsequent tax deductions due to Income in Respect of a Decedent (IRD), some financial planning professionals believe it is often more beneficial to reduce the aggregate estate tax liability rather than depending on recouping taxes over a period of years through the IRD deduction.


4Q09 Quarterly Market Summary Available To RIAs

Advisor Products’ Quarterly Market Summary becomes available Monday for the fourth quarter of 2009.

QMS is a comprehensive analysis of activity in stock and bond markets and examines a range of asset classes.

It is utilized as a companion piece with quarterly performance reports provided by RIAs.

Written by a veteran financial reporter and edited by one of the nation’s leading financial editors, QMS is delivered to subscribers as an eight-page Microsoft Word document 10 days after the end of every quarter. You can cut, paste, and edit QMS to fit your needs.

Each quarterly release of QMS typically covers performance of:

  • S&P 500 large cap stocks
  • Russell 2000 small cap stocks
  • Growth versus value stocks
  • Corporate earnings
  • Foreign stocks
  • Emerging markets
  • U.S. Dollar versus Euro
  • Fixed income markets
  • Two versus 10-year Treasurys
  • Corporate bonds
  • Economic growth
  • Fed interest rate policy
  • U.S. Retail sales
  • Consumer confidence
  • Unemployment
  • Consumer Price Index

Because of the time sensitive nature of the content, QMS is submitted for review by FINRA only after it is distributed to RIAs. Registered reps, therefore, should consult with their broker/dealer about its use.

QMS is priced at $1,200 for a one year subscription, and can be ordered by submitting this form.

Website Compliance System Upgraded For Broker/Dealers And Advisors

Advisor Products this week upgraded AdvisorSites Compliance Engine to streamline advertising compliance for independent advisors and broker/dealers.

Advisor Products hosts websites for 1,200 independent advisory firms, and provides them with AdvisorSites BackOffice, a content management system that enables technology novices to add new text, graphics, and pages to their websites.

AdvisorSites Compliance Engine (ACE) is a component of the BackOffice content management system. When an advisory firm changes tax, graphics, or pages on its website, ACE automatically notifies the advisory firm's compliance specialist, typically at an independent broker/dealer. ACE can be enabled on any firm’s website and provided to broker/dealer or compliance consultant.

With ACE, a compliance specialist can accept, reject, or require revisions to the content, and the changes made by the advisory firm must be submitted and then approved by the compliance specialist before they are displayed on the firm's website.

The upgrade to ACE eases the workflow and organizes information between the advisory firm and its compliance officer when changes are needed to the advisory firm’s website. Here's a summary of the new features.

Attach Notes. An advisory firm can attach a note to any new content it submits for approval and the note is visible to the compliance analyst reviewing the content. An advisor can attach a note to a submission telling the compliance analyst that the content was previously approved and providing a reference number for the earlier submission, or an advisor can simply attach a note to a submission for his own reference.

A compliance analyst can also attach notes to a submission. If, for instance, content submitted by an advisory firm is rejected and requires changes, the compliance officer in rejecting the content can attach a note about changes required for approval.

Compliance History. The entire compliance history of each page of the advisor's website is saved and available to the advisor and so are all notes attached to each submission. The Compliance History Report lists dates of all content submissions and their results. An advisor and B/D can go back and see when a page on the website was last changed, or how long it takes for a compliance analyst to review submissions.

The Compliance History Report creates an ongoing record that the advisor and B/D compliance officer can make available in the event of an audit by FINRA, or state or federal securities regulators. The report displays the compliance history an advisory firm's entire website or the history of a particular page.

ACE has been used by scores of independent broker dealers for over a decade. It also automatically creates archives of advisory firm websites whenever changes are made to a site.

While ACE is used predominantly by independent broker/dealers to streamline compliance workflow, it can also be used by Registered Investment Advisers to outsource advertising review to a compliance consultant.

Advisor Products added the new features to ACE after a compliance analyst at a broker/dealer suggested ways to ease his workflow. If you are an independent broker/dealer or RIA and have suggestions for improving Advisor Products systems, please let me know.

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