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Executives' Financial Planning Perks Are on the Chopping Block

Excerpt: As bailed-out financial institutions take more heat over the massive pay packages dished out to their executives, a key fringe benefit usually awarded to top officers -- the financial planning perk -- appears to be on the chopping block. Every element of executives' pay is being carefully scrutinized by lawmakers, shareholders and taxpayers. As a result, several of the nation's largest financial institutions have already stopped footing the bill for their executives' financial planning, which historically has been a staple of compensation packages for CEOs, CFOs and other top brass.

'Dean of Financial Planning' Harold Evensky Says Reg BI 'Makes Absolutely No Sense'

"There seems little interest by the regulators and Congress to seriously address the issues of investor investment protection as a result of massive financial lobbying by the financial services industry, a massive lack of understanding of the issues involved (i.e., confusing major fraud with nickel and dime investor investment erosion), and the underlying conservative belief that all regulation is bad."

Bank Does the Unthinkable: HSBC Moves Its Financial Advisors from Commissions to Salaries

"HSBC made the switch to align the compensation structure for advisors in the U.S. with those in the rest of the bank ... But observers suspect that there are other reasons for the shift. Some say the desire to more closely align client and advisor interests may have prompted the change. Without commissions, the fear or perception that advisors are 'spinning accounts' or suggesting products and services merely to increase their production is removed[.]"

Financial Stability Oversight Council Seeks Comments on Proposed Rules for Stabilizing Money Market Funds

"An advisory committee organized under the Treasury Department on Tuesday voted unanimously to move forward with a set of proposed rules intended to stabilize money-market funds and prevent a run on assets similar to the jolt the market experienced during the financial collapse of 2008 and 2009. The Financial Stability Oversight Council (FSOC) moved the set of three proposals to the next stage in its administrative process, asking for public comment on the proposed rules that the Securities and Exchange Commission would ultimately draft and enforce."

Working with a Financial Advisor Lowers Boomers' Retirement Debt

"[B]oomers who developed retirement income plans generally were more optimistic about their retirement finances. Of the pre-retirees surveyed, 27% said they worked with financial advisors to develop retirement income strategies. Among pre-retirees who worked with advisors, 73% said that did not expect to carry debt into retirement."

Faulty Retirement Planning Advice to Cost Advisor and Firm $1.2 Million

"A FINRA arbitration panel sided with the client over the advisor's alleged misconduct ... According to ... an attorney representing [Cindy-Marie Rogers], [the advisor] advised Rogers, ... who was earning about $80,000 per year, on rolling over a $529,000 lump-sum pension payout plus an $85,000 401(k) plan into an IRA and buying a variable annuity. At age 49, Rogers took an early retirement after being advised ... that she could afford to do so, in part through a provision in the tax code that permitted early withdrawal from qualified retirement accounts under certain circumstances, [the attorney] says.... He says that Rogers soon discovered that the 7% withdrawal rates she needed to meet living expenses were depleting her savings and exceeded what was permitted under IRS rules, meaning she got hit with a steep tax bill."

Regulators May Put Robo Firms Under Fiduciary Microscope

"Following industry suggestions that robo advisors may be violating investment laws, SEC Commissioner Kara Stein is publicly questioning whether a fiduciary duty applies to automated advice -- and whether existing laws should be revised to account for the digital wealth management platforms.... [Stein's] questions touched upon [a recent report's] main thrust: that robos do not provide personalized investment advice, do not minimize investment costs, are not free from conflicts of interest, do not meet a high standard of care, do not act in a client's best interest, exclude ERISA accounts and do not meet the Department of Labor's proposed best interest contract as part of a fiduciary standard."

NAPFA to Make CFP Designation a Prerequisite for Membership

"To foster the evolution of financial planning as a widely accepted and understood profession, [the National Association of Personal Financial Advisors] announced Tuesday that, starting Jan. 1, it will only accept the CFP designation for anyone applying to become NAPFA-registered planners.... NAPFA's National Board recognized that the profession needed to rally around a singular professional designation in the same way the public trusts that professionals with CPA, MD, or JD marks are meeting education, training and ethics requirements, the association said in a statement."

Massachusetts Regulator Doubts Robos Can Be Fiduciaries

"The highly anticipated [DOL] fiduciary rule may not mean a fast track for robo advisors after all. In Massachusetts, digital advice firms seeking to register as RIAs will face extra scrutiny from state securities regulators, who expressed doubts about their ability to act as fiduciaries.... While it is the first state regulator to formally issue policy on digital advice, is not the first authority to scrutinize the workings of robos. The SEC has stated it is reviewing its rules regarding automated advice, and earlier this month FINRA released guidance for broker-dealers considering the use of such tools."

FINRA Makes Its Case for SRO Role Overseeing Advisors

"In testimony before members of a House committee on Wednesday, Richard Ketchum, the chairman and CEO of the Financial Industry Regulatory Authority, or FINRA, offered an enthusiastic endorsement of a legislative proposal to establish a self-regulatory organization to oversee retail investment advisors, an issue that has sparked considerable controversy throughout the industry. The bill 'has it right,' Ketchum told members of the Financial Services Committee. 'There should be provisions for one or more SRO whether or not it is FINRA.'"