How to Build a

advisor
1Q03/ Issue 6
3
Fee-based Planning
Is Future for Dave
Penniall
4
A Universe of Features
with V2A
5
AIG Advisor Group
Elite Partners
7
The Strength
Behind MAP
8
Bruce’s Book Bits: Fish!
FOR BROKER/DEALER USE ONLY
THE
DEAR AIG ADVISOR GROUP FINANCIAL ADVISER:
Spring is upon us – finally! A new season in a new
year. Like the saying goes: “Everything old is new
again.” We have seen a trend over the past 12
months, particularly in the press, that the business
of “old fashioned” financial advice (working with a
financial adviser as opposed to doing it yourself) is
“the new thing.”
You’ve known for years that the art of providing
financial advice is not a fad. It’s what you do everyday, assisting clients
with their financial futures. We, at the Home Office, know that delivering
the best products and services is our utmost responsibility. Supporting
you, our client, is what we do best!
It’s during these challenging times for our industry and nation that
together we rise to our greatest efforts. Your affiliation with the industryleading AIG Advisor Group broker-dealers – Advantage Capital Corporation,
FSC Securities Corporation, Royal Alliance, Sentra Securities Corporation,
Spelman & Co. and SunAmerica Securities – gives you the unique opportunity of having extensive resources specifically focused on helping your
investment advisory business.
Among the resources that the Investment Advisory Division is pleased
to offer you, is this newsletter. Throughout The Advisor, you’ll find: Ideas
on attracting high-net-worth clients, suggested improvements to the feebased services you already offer and a discussion with a successful feebased adviser, just to name a few.
Sourcebook is another useful tool. The first quarter Sourcebook gives you
the latest information about VISION2020 Advisor’s performance reporting
features; the importance of the compliance standards set by the Association
of Investment Management Research; and our newest addition to the field,
our Regional Consultants who assist you with all your advisory needs.
We’ve also created an email box, [email protected]om, available to all
AIG Advisor Group broker-dealer reps. This gives you the opportunity to
get questions answered and to find information on VISION2020 Advisor,
Managed Assets, our Third Party Money Managers and fee-based industryrelated topics. Please feel free to email us today.
The Investment Advisory Division is poised to help you through these
volatile times with personal attention, vast choices in products and our
commitment to the best service our industry has to offer.
Enjoy the first quarter of The Advisor!
10 Keeping Up with Form
ADV Updates
11 Q&A: Billing Groups
Inside V2A
12 “Test Your Knowledge”
and win a gift certificate to the next NEC!
IN THE NEWS
How to Build a
Consulting Business
by Susanna Joiner
AIG Advisor Group and the Managed
Accounts Consulting Group have teamed
up to present a comprehensive all-day
workshop on how to build a consulting
business. Over 300 Registered Reps
attended the “Building An Investment
Consulting Business” workshop in the first quarter.
The trend in the financial services industry is shifting to a fee-based
business.The workshop provided valuable resources on how to
move transaction-based assets into fee-based assets. Registered Reps
learned the importance of using a Consultative Process when
developing fee-based relationships with clients, and how this
increased their value as advisers.The four-step Consultative Process
includes the following:
Identify Goals
During the initial meeting with the client, discuss what is
important to them such as:
Investment goals
Amount of money to invest
Time horizon
Risk and return
Liquidity
Tax implications
■
■
■
■
■
Clara Sierra
FVP, Director of Advisory Services
AIG Advisor Group
■
(Continued on p.2)
AIG Advisor Group, Inc. is the marketing designation for the wholly owned subsidiary broker-dealer members of American International Group, Inc. (AIG). Securities and investment advisory services offered through
Advantage Capital Corporation, FSC Securities Corporation, Royal Alliance Associates, Inc., Sentra Securities Corporation, Spelman & Co., Inc. and SunAmerica Securities, Inc., members NASD, SIPC and SECregistered investment advisers.The term Financial Advisor is not an indication that the Registered Representative is a registered investment advisor. Registered Representatives will provide information regarding the
services they are qualified and registered to provide.
IN THE NEWS
How to Build a Consulting Business in One Day (continued)
Now you can use the client’s profile to
help you develop the client’s investment
program.You may also want to use a
Risk Tolerance Questionnaire and an
Investment Policy Statement to further
aid you in defining the client’s goals.
Develop an Asset Allocation Strategy
After reviewing the client’s goals, develop
an asset allocation plan.This
plan will be the road map
Registered
for the client and will help
them towards achieving the goals identified
in the initial meeting.
Select Investments
The process of selecting and implementing
investments that fit the client’s profile and
asset allocation strategy is ongoing.The
investments can range from mutual funds,
to equities and bonds, to separate accounts.
Monitor Performance
Schedule a meeting with clients on a
regular basis to review their portfolios as
well as their investment strategies. This
is also an ideal time to identify any lifestyle changes that could effect the overall
asset allocation.
Other topics discussed throughout the
day were:
Tips on how to write your
Reps learned the importance of
Value Proposition Statement
using a Consultative Process when developing
Defending fees in a down
market
fee-based relationships with clients, and how
Setting goals
this increased their value as advisers.
■
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Reps gave positive feedback after learning
how the Consultative Process could
immediately help them transition their
businesses from commissions to fees.
Comments included: “…the workshop
was extremely helpful and informative,”
“…one of the best days spent in terms of
enhancing my business” and “a very productive use of time.”
Please contact your Investment Advisory
Marketing or Regional Consultant Team
to learn how you can transition your business to fee-based today.
Susanna Joiner is an Investment Advisory Specialist.
THE
advisor
p. 2
IN THE SPOTLIGHT
DAVE PENNIALL
Fee-based Planning Is the Wave of the
Future for Top Producer Dave Penniall
by Robin Weber
Dave Penniall believes fee-based planning is the best way to actively manage
his clients’ portfolios.With the assistance of VISION2020 Advisor (V2A), he
hopes to continue increasing his fee-based business to about 75 percent of
his total financial planning business.
Dave started learning about the financial services business as his
professional baseball career was ending. He realized that his teammates were not receiving the financial planning and investment
advice they needed.When he retired in October 1982, he became
a SunAmerica Securities registered representative by joining
Morgan Underwood’s practice in Pasadena, California.
With the assistance of his staff, Dave has transferred a significant
amount of his assets onto the V2A platform. Roger Conde, a
rep with Penniall and Associates, has been instrumental
in this conversion, also transitioning some of his own clients to
the V2A platform. “I think that V2A is going to streamline the
management of our portfolios,” says Dave.
After 15 years in the financial services business, Dave became his
own OSJ Manager. He was convinced that the fee-based environment was the best structure for his practice. He wanted his
clients to have active portfolio management and he needed a
consistent structure to maintain clients’ accounts.
Dave thrives on helping his clients reach their financial goals. He
also likes working with the public and offering advice to those
starting out in the investment advisory arena.“Develop a system
and strategy that will work for you and your clients, continue to
define and refine that strategy, attack it with passion and have the
confidence to follow it,” he suggests.
Morgan eventually retired and Dave purchased his practice
through iValue, a program that assists reps who are seeking an
exit plan by matching them with potential buyers seeking
rapid growth through acquisitions. Dave began working with
Morgan’s clients, discussing reallocation of their portfolios to
represent a more modest investing approach, reflective of his own
conservative, yet active style. Dave’s personal efforts endeared
him to Morgan’s clients, which earned
him their respect, as well as their business.
“I think that
Dave’s personal life mirrors his professional life – working hard and playing
hard. He is a partner in West Coast
Sports Management, a sports agency
that represents about 40 professional
baseball players.With this outside
activity, he hopes to gain clientele for
his financial planning business.
V2A is going
When asked if he prefers his clients to
He and his wife, Jane, have a 19-year-old
pay fees or transaction costs, Dave says,“I
son who has followed in his father’s
to streamline the management
offer both commission- and fee-based
footsteps by playing baseball at UCLA.
of our portfolios.”
options; however, I prefer fee-based
They also have two daughters, one in
because of the flexibility within the
high school and the other in junior
high, both playing Club soccer.As a former ball player, Dave enjoys
portfolio and a selection of over 5,000 funds – all without the conwatching his children develop and play in their chosen sports.
flicts of interests that can arise in a commission-based account.The
more the assets grow, the better for both the client and the adviser.”
Robin Weber is an Investment Advisory Specialist.
THE
advisor
p. 3
PRODUCT FOCUS
Get Access to a Universe of Features
with VISION2020 Advisor
by Jeff Vivacqua
During the last year, over 300 advisers have begun using VISION2020 Advisor
(V2A) to streamline their advisory businesses. In addition, reps who previously
conducted only commission-based business are making the change to V2A.
With the best suite of tools available today,V2A can transition your practice
easily and effectively.
How was the AIG Advisor Group able to
make such a powerful platform available to
over 9,000 reps? We’ve teamed up with
well known companies, like Ibbotson, and
mutual fund and variable annuity Elite
Partners to offer you top-notch products
and services.
V2A allows you to create and save asset
class and/or product-based models for use
with clients. It provides access to more
than 5,000 load and no-load mutual
funds, equities, bonds, CDs and UITs at
NAV. Any combination of approved products can be used with clients.
Product Search Advantages
When creating models, proposals and
portfolios within V2A, you have the
ability, within the Product Search function, to look for all types of securities.
Depending on the information you have,
you can choose to search by fund name
or asset class.
The platform also
streamlines the
search and asset
allocation creation
functions.With just
one click of a
mouse, you will be
able to review 1-,
3- and 5-year
Product Search Function on V2A platform
returns figures on
each fund (when
The Investment Advisory Division is conavailable). Ibbotson supplies the asset clastinuously looking for more ways in
sification functionality as well as the effiwhich our products and services can better
cient frontier modeling.
help you and your clients. In V2A, we
offer a broad product listing but also the
More Value-Added Capabilities
ability to streamline your choices.
As part of our Phase II initiative, we are
Whatever you’re looking for, you’ll find a
working to make variable annuities available,
universe of tools and resources from the
as well as adding a Real Estate asset class
AIG Advisor Group to help you grow
to the modeling functionality of the V2A
your business.
platform.These two new features will
provide you with additional product
To contact any of our Mutual Fund or
selections and tools to work within client
Variable Annuity Elite Partners, use the
portfolios.We’ll let you know when these
Reference Guide on the following page.
features become available through the
For more information about VISION2020
V2A platform.
Advisor, call 800.551.5616.
Jeff Vivacqua is AVP of Advisory Services.
THE
advisor
p. 4
PRODUCT FOCUS
Get Access to a Universe of Features with VISION2020 Advisor (continued)
2003 AIG Advisor Group Elite Partners
The AIG Advisor Group broker-dealers have established special relationships with several mutual fund and variable annuity companies.
We encourage you to use their products when appropriate.
Mutual Fund Elite Partners
Variable Annuity Elite Partners
AIG SunAmerica Mutual Funds
800.858.8850
Nations Funds
800.321.7854
AIG SunAmerica Retirement Markets
888.502.2900
Pacific Life
800.722.2333
Alliance Bernstein
800.523.5695
OppenheimerFunds
800.255.2750
American Skandia
800.628.6039
Prudential Investments
800.778.2688
AIM Investments
800.457.0630
Putnam Investments
800.354.4000
Hartford
877.454.4777
Putnam Allstate
800.354.4000
Fidelity Investments
800.526.0084
Van Kampen Funds
800.438.6726
Manulife Financial
800.334.4437
SunLife Financial
800.343.2829 x 53020
Franklin Templeton
800.342.5236
WM Funds
800.222.5852
MFS Investments
800.343.2829
Travelers Portfolio Group
800.874.1225
MFS Investments
800.343.2829
Nationwide
800.321.6064
Investment Advisory Services and Ibbotson Associates bring you the first of six White Paper Reviews.
VISION2020 Advisor Asset Classes
Asset Class
Benchmark
Expected Return
Standard Deviation
Large Cap Growth Stocks
S&P/BARRA 500 Growth
10.26%
24.46%
Large Cap Value Stocks
S&P/BARRA 500 Value
11.48%
18.63%
Mid Cap Stocks*
CRSP Deciles 3-5
12.47%
24.96%
Small Cap Stocks*
CRSP Deciles 6-8
13.92%
29.75%
International Stocks
MSCI EAFE
10.77%
25.34%
Emerging Markets
MSCI Emerging Free
19.11%
51.35%
Real Estate (REITs)
NAREIT – Equity
10.68%
17.26%
Long Term Bonds
LB LT Gvt/Credit
5.16%
11.91%
Intermediate Term Bonds
LB IT Gvt/Credit
4.53%
5.64%
Short Term Bonds
LB 1-3 Yr Gvt
4.10%
4.06%
High Yield Bonds
LB High Yield
6.77%
12.62%
International Bonds
SB Non-U.S. 1+ Yr Gvt
4.61%
14.64%
Municipal Bonds
LB Muni
3.86%
6.01%
Cash Equivalents
SB U.S. Domestic 3 Mo Tbill
3.50%
2.66%
Copyright ©2003 Ibbotson Associates, Inc.
*The mid and small cap asset class categories are not broken out into value and growth because:
They account for a small slice of capital markets in comparison to large cap growth or value
There is a smaller number of funds pursuing growth or value strategies than there are those for the large cap category
• They have a shorter history of benchmarks
• There is generally less demand for these asset classes from clients
•
•
THE
advisor
p. 5
Fee-Based Transition Made Easy
Begin by writing a business plan. Follow these six steps.
■
STEP 1. Identify your most promising clients.
■
STEP 2. Segment these clients.Your top high-net-worth clients are your “A” book;
your least active, lowest revenue generating clients are your “C” book.
■
STEP 3. Determine your IA Registration. Find out if you have the proper licensing
for your state and broker-dealer. A Series 65 or 66 is required to conduct investment
advisory business.*
■
STEP 4. Contact IA Marketing.Gather information about VISION2020 Advisor,
Managed Assets and Third Party Money Managers.
■
STEP 5. Decide how you will conduct advisory business. Determine
if a Corporate IAR or an independent RIA is right for you.
■
STEP 6. Obtain Form ADV paperwork. For independent RIAs, the broker-dealer
will provide standard language to insert in your Form ADV. For Corporate IARs,
the ADV is already complete.
*If needed, register to take license exam.
IA Website: www.v2020-sai.com
IA Specialists
ACC: 800.235.2237 press 7
RAA: 800.821.5100 x5717
S&S: 800.748.5673 x3839
FSC:
800.547.2382 press 5
SAS:
800.552.3319 x3839
Regional Consultants: 800.551.5616
Use VISION2020 Advisor
To Make Your Fee-Based Transition Successful
■
STEP 1. Confirm your VISION2020 Advisor access. Call your VISION2020 Help Desk to determine that access
to VISION2020 Advisor has been activated.
■
STEP 2. Begin transitioning clients. Use your A, B and C lists to target your most promising clients.
■
STEP 3. Provide Risk Tolerance Questionnaire to your clients. Have them complete the form and return to you.
■
STEP 4. Work with clients to create an Investment Policy Statement (IPS).The IPS is a concise written statement
that outlines your obligation as the advisor, as well as the client’s objectives, goals and expected rate of return.
■
STEP 5. Develop and review asset allocation strategy. VISION2020 Advisor provides the software you need
to allocate assets and manage risk efficiently and cost effectively.
■
STEP 6. Use portfolio optimization and execution. Review orders and place trades
simultaneously.
■
STEP 7. Generate quarterly performance reports.Monitor account activity.
ON THE MAP
The Strength Behind the Managed Assets Platform
by Brad Chambers
The Managed Assets Program (MAP), a comprehensive investment management
platform sponsored by the AIG Advisor Group, is designed to help your highnet-worth clients get more out of their wealth.The program provides access
to a broad universe of proven investment managers, mostly available to large
institutions of major asset classes. MAP currently gives reps access to 45 different Institutional
Money Managers covering nearly 100 strategies.A leading strength behind the success of the
Managed Assets Platform is clearly the level of due
diligence and research conducted
on each money manager.
The team of analysts known as the Strategic
Investment Research Group (SIRG) provides independent
research, advice and consulting support for MAP. SIRG
is one of the first centralized research departments located
within a U.S.-based financial services firm to focus on the entire
global money management community.
SIRG has 20 highly trained, experienced and specialized analysts
who devote their full attention to knowing and understanding
the players in the global money management community.
Members of the team have earned advanced certifications
such as: CFA, CFP, PhD and/or M.B.A.Team members
are encouraged to further develop their analytical capabilities through advanced coursework and access to technology.Their
knowledge and ability to analyze an enormous quantity of proprietary and industry data are critical to identifying the most consistently effective managers.
SIRG employs the most advanced technological tools, including
performance analytics, database screening software and proprietary reports.These tools provide returns-based style analysis and
security-based attribution analysis, as well as data on individual
securities, markets and market benchmarks. SIRG applies the
full spectrum of tools and applications to screen and monitor
investment management firms.
The research and
supervision of SIRG
can help investors and
financial professionals
feel confident.
The SIRG manager evaluation process is a comprehensive and
structured approach, rigorously executed by highly specialized
and experienced professionals.The process centers around the
consistent application of a 10-Attribute Investment Manager
Evaluation Model, which closely examines both quantitative and
qualitative factors.This effort seeks to understand the investment
manger’s process and the risk factors associated with that process,
as well as to forecast the probability of a manger continuing to
deliver superior investment results into the future.
Over time and through experience, SIRG has identified 10 major
attributes, or characteristics, that are associated with superior and
ongoing investment manger performance.
(Continued on p.9)
THE
advisor
p. 7
BRUCE’S BOOK BITS
Fish! Catch the Energy & Release the Potential
Stephen C. Lundin, PhD; Harry Paul, and John Christensen
by Bruce Levitus
Recently I was faced with a dilemma: How do I motivate people to do work
that is “less-than-exciting” and how can I let them realize that the attitude
they bring with them to work each day affects everyone in the
organization. So it was off to the local book
store to read yet another management book.
If you have ever considered any management text, you quickly realize the vast
amount of books available – all claiming to
have the best approach to help you coach
your staff.As I perused the shelves, my eye
quickly came upon what looked like a
Pepperidge Farm Goldfish Cracker. Since
my daughter, Ricki, loves every permutation of these little snacks, I quickly reached
for the book. Little did I realize that at that
moment my view on managing people and
relationships would change forever.
Fish is the story of the workers at the
famed Pike Place Fish Market in Seattle.
The account is told through the eyes of a
middle line manager at a local financial
institution.The main character finds herself
in a bind when she receives a promotion,
only to realize that the promotion will
mean managing a group that has earned a
reputation as the “toxic waste dump” in
this fictitious bank. As she establishes herself as the manager of this group of lost
souls, she quickly becomes disenchanted
with the task ahead of her.
One day, rather than eat lunch at her desk,
she takes a walk and stumbles on a fish
market.As she stands watching both workers and shoppers enjoying themselves, she
begins a conversation with Lonnie, the
manager of these happy fishmongers.
She cannot understand how grown
men forced to deal with the task of
handling, filleting and packing fish could
actually enjoy their work.The book and
its companion documentary go on to
explain the four-phase process in detail:
Choose Your Attitude, Play, Make Their
Day and Be Present.
Choose Your Attitude
The first phase of the process that Lonnie
imparts on her is “ Choose Your Attitude.”
Simply put, each day we can go to work
and be mad and angry at the world. Or we
can say that I will choose the way I interact
with the people around me. Look at it this
way: you can stay mad at the person who
cut you off on the freeway on your ride to
work, but what good will really come from
it? Rather, if you choose that none of this
nonsense is going to ruin your day, your
positive attitude quickly comes through.
Play
The whole idea behind “Play” is to try
and imagine a workplace where people
really enjoy their work.
Make Their Day
I was particularly impressed with “Make
Their Day” because it is oftentimes
something as
simple as acknowledging someone’s actions or making him or her feel
like part of the show to impart happiness
on someone’s day. At the fish market in the
book, one example of making someone’s
day was challenging a customer to catch a
salmon hurled from across the shop.When
one customer, an elderly woman, makes
the catch, everyone around her applauds.
From my point of view as a sales manager,
perhaps it’s something like acknowledging
a job well done, or saying,“Thanks, I
couldn’t have done it without you.”
Be Present
The final element, “Be Present,” refers
to focusing on the task at hand. Be available for the people around you. A fine
example is to actually listen to the person
(Continued on p.9)
THE
advisor
p. 8
BRUCE’S BOOK BITS
Fish! – Catch the Energy & Release the Potential (continued)
on the other end of the phone call. Sure,
it’s easier to cruise the Internet during
that time, but when you really listen, the
concept of being present comes through
and enhances the process.
schooled in.” Now I view managing in a
whole new light. Each morning I choose
my attitude:Today is going to be a great
day because I love my work and the people
that help me do my job.”
I don’t think I have ever said that a management book has changed my life. Prior
to this easy-to-read story, I had sided with
the viewpoint that said,“managing is
something that you are born to do, not
I highly recommend this book to anyone
who has to deal with people – in other
words, all of us. If you are a manager, you
will gain insight from these simple principles. Even if you never manage a single
person, you will gain from this story
because at the heart of it all – each day at
the very least – we must manage ourselves.
So go out and choose your attitude, find a
way to play, go make someone’s day and be
present for everyone around you.
Two follow-up books to Fish are now
available: Fishsticks, a practical guide
to the Fish philosophy, and Fishtales,
a series of real life applications of the
concepts in Fish. To learn more, go to
www.fishphilosophy.com.
Bruce’s Book Bits are rated
on the following scale
A must-read!
Some value here.
More harm than good.
No way!
The Advisor Rating
For recommending to clients
For recommending to new financial advisors
For recommending to experienced financial advisors
Bruce’s rating for this book
For recommending to clients
For new financial advisors
For experienced financial advisors
Bruce Levitus is Vice President and Manager of
Regional Consultants.
ON THE MAP
The Strength Behind the Managed Assets Platform (continued from p. 7)
These attributes are both quantitative and qualitative and are
gauged using a variety of tools and techniques. Each major
attribute is a distinct area of inquiry and guides SIRG analysts in
their evaluation and reporting activities. In a completed analysis,
each major aspect of the model must be fully investigated to
yield its maximum informational content before meaningful
conclusions may be inferred.
The 10-Attribute model includes:
Investment Team Talent, Experience and Quality
Investment Team Stability and Motivation/Incentive
Investment Team’s Experience Working Together
Quality of Investment Process and How Well it Is Implemented
The Quality and Utilization of Research and Judgment
Performance
Trading Management and Skill
Quality of the Firm’s Management and Ownership Structure
■
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■
■
■
Client Servicing
Compliance and Ethics
The individual investor has a need for specialized, in-depth
research across the field of investment management, both to
help manage risk as well as to maximize his or her potential for
investment success. Often, investors do not have the experience
or time to thoroughly research and consider thousands of
money managers and make the most informed decisions possible
in the highly specialized field.The research and supervision of
SIRG can help investors and financial professionals feel confident that the investment managers and strategies have been held
to a high and strategies-consistent standard of review.
■
■
■
■
To learn more about the Managed Assets Platform, please
contact your Investment Advisory Marketing Department
or email [email protected]
Brad Chambers is an Investment Advisory Specialist.
THE
advisor
p. 9
COMPLIANCE CORNER
Keeping Up with Form ADV Updates
Is Critical to Your Business
by Eric Collazo
It’s that time of year again.Time to complete annual updates to
your Form ADV. Annually, the SEC requires updated Form
ADVs from all Registered Investment Advisers (RIAs or advisers)
within 90 days of fiscal year-end.
Consider this scenario:You submit your annual update without
verifying that your Form ADV complies with your practice. A
few years later, you could discover that the document improperly
discloses your advisory services. This can be problematic since
the Form ADV is an RIA’s proof against possible civil and
regulatory actions.
That’s why it’s important to take the time to review each item
in both Parts 1 and 2 carefully. Has your business experienced a
subtle shift that renders your current disclosure inaccurate? If
so, make the appropriate revisions at that point.
Many of the current disclosure mistakes you may have could be
the result of the Form ADV’s structure. As
most of you are aware, the Form ADV Part
Many of the current disclo1 was revamped about two years ago and
morphed into Parts 1A and 1B. Not only
sure mistakes you may have
was the document considerably longer, but
could be the result of the
it queried the rep on many items already
problem for the adviser. For purposes
Form ADV’s structure.
covered in the “old” Part 2.This would not
of clear disclosure, an adviser’s Form
be an issue if the SEC released the “new”
ADV and Investment Advisory
Part 2. Unfortunately, a “new” version of
Agreements should be consistent.To ensure this, review your
Part 2 has not been supplied from the SEC. As
Investment Advisory Agreement at the same time you perform
a result, the first step in your annual revision should be a comyour update. Discovering substantive disconnects now is preferable
parison of your current Parts 1A, 1B (if applicable) and 2. If you
to noticing them with a client.
discover inconsistencies during your review, make the necessary
revisions at that time to avoid future problems.
Please keep in mind that significant changes to your practice
must be disclosed immediately and should not be saved for the
If Parts 1 and 2 are consistent, your next stop should be to
annual update.
review your Investment Advisory Agreements.While many
advisers diligently make updates annually, oftentimes an
If you have any questions concerning this requirement, contact
Investment Advisory Contract will remain unchanged for a
the Investment Adviser Hotline at 800.821.5100, ext. 5389.
longer time.This does not pose an issue from the perspective
Eric Collazo is Director of Investment Adviser Compliance.
of the annual update requirement; however it creates another
THE
advisor
p. 10
Q&A
Q&A
by Tony Biancarosa and Kristin North
Welcome to the Question Corner – where answers are provided
to frequently asked questions about VISION2020 Advisor (V2A)
and Managed Assets.This edition focuses on Billing Groups inside
V2A. Billing is the main menu item within Billing Groups.
QUESTION:
QUESTION:
How do I find a complete list of all created
Billing Groups?
Why doesn’t a Billing Group begin billing on
the entered Start Date?
ANSWER:
ANSWER:
Place a percent sign (%) in the Billing Group
name field. It will return a list of every Billing
Group you have created, the accounts in each
group and the Fee Schedule assigned to each
account. If you see “Unassigned” in the Fee
Schedule column, then you should edit the
Billing Group to assign a Fee Schedule. Remember, a Fee Schedule must be assigned to an
account in order for any billing to be processed.
Both of the Initial Billing Benchmarks must be
met in order for the Billing Group to start billing.
The two benchmarks are the Start Date and
Group Asset Value. If only one benchmark is met,
then the group does NOT start billing. Best practice: If you are unsure of the funding amount,
wait for the account to be funded before creating
the Billing Group.Then you can start billing
immediately on the entire Account Value.
QUESTION:
QUESTION:
What are the steps I need to remember to get paid
on a V2A account?
Am I able to select a single V2A account to pay the fees
for all accounts that are part of the same Billing Group?
ANSWER:
The key steps are:
1. Create a Fee Schedule
a. Click Billing
b. Click Add Fee Schedule
2. Create a Billing Group
3. Associate accounts with the Billing Group
4. Assign a Fee Schedule to each account
Steps 2 through 4 are found by clicking the
Billing button on the main menu bar at the
left-hand side of the screen.Then, click on Add
Billing Group. Simply complete each tab and
click the Save button.
ANSWER:
Yes. Select Master Account under Account
Distribution on the General tab. Note that
only a non-qualified account is eligible to
be a Master Account.
QUESTION:
Do special requirements exist for a Master Account
that is also a Trust?
ANSWER:
Yes.The Trust powers must allow for the Trust
to pay advisory fees for non-Trust accounts.
Keep those questions coming! Please send them to [email protected] and we will
address them in upcoming issues of The Advisor.
Tony Biancarosa and Kristin North are Investment Advisory Specialists.
THE
advisor
p. 11
TEST YOUR KNOWLEDGE
What’s in a Name?
What’s in a name? The roles of broker, financial planner and investment advisor are very similar
and often overlapping. How well do you know the difference?
Time is running out to receive a $50 credit toward your 2003 National Conference expenses.*
Send in your answers today. If you are one of the first three Registered Reps to correctly
answer all the questions, you’ll win! Print this page with your answers circled and fax it to
212-551-5358, Attn: Bonnie Miller or email to [email protected]
1. One of the key distinctions between
an investment advisor and a broker
or planner is:
a) Ongoing asset-based compensation
b) Selling advice as opposed to
products or intellectual capital
3. A stock/insurance broker:
a) Recommends specific products for
transaction-related compensation
b) Determines client suitability for
investing in product at point-of-sale
c) Providing portfolio management
or monitoring
c) Does not hold himself out to the
public as a financial planner or
investment advisor
d) All of the above
d) All of the above
2. A financial planner often sells:
a) Asset Management
b) Specific insurance products
c) Retirement/Estate Planning
d) Specific securities
5. An investment advisor providing
portfolio monitoring, reporting
and performance appraisal has
discretion to:
a) Buy/sell securities
b) Reallocate portfolios
c) Hire/discharge other managers
d) None of the above
4. An investment advisor provides:
a) Continuous asset management
and supervision
b) Portfolio monitoring, reporting
and performance appraisal
c) A and B
d) A or B
Registered Rep Name and Broker-Dealer: ____________________________________________________________________
Address: ________________________________________________________________________________________________
City, State, Zip: __________________________________________________________________________________________
*Offer expires April 30, 2003.
Publisher: Karen Morstad
Editors: Bonnie Miller, Jeff Vivacqua
Please send letters to the editors to [email protected]
THE
advisor
p. 12