lbert Einstein said that the definition of genius is taking the complex and making it simple. Morgan Stanley’s departure from the broker protocol on October 30th may do the exact opposite by making an already complex industry more complicated. Ownership of the client relationship and the standard of client care from firm to firm can be perplexing in today’s financial marketplace. The broker protocol was established in 2004 in an effort to limit litigation among member firms when an advisor leaves one firm to join another firm.
The “Protocol” allowed for advisors to take a limited amount of information about their client roster with them to establish their practice at a new firm. Advisors who have moved from one firm to another may have been lured with up-front cash compensation, or invested their own capital to start an independent Registered Investment Advisory firm, but core to their move was the choice of a better environment for them to work on behalf of their clients. Firms that are not part of the Protocol have tended to be more aggressive litigators and arbitrators which makes it harder for advisors to leave and take clients with them. Firms who do not participate in the Protocol have made it clear that they (the firm) own the client relationship.
“Currently, only Independent Registered Investment Advisors (RIA) are required to act in a Fiduciary capacity and it applies to every account type.”
That said, there are many people who are clients of large firms because they enjoy working with an advisor of their choice. The idea that a firm owns that choice obscures matters for both the client and the advisor. However, the threat of litigation may not be enough to dampen interest in advisors leaving, especially for the independent Registered Investment Advisory channel where advisors are held to a Fiduciary Standard vs. the Suitability Standard and the client-advisor relationship has been more warmly embraced. Clients have started to move to this model in large part because they know their advisors must act in their best interest, and they appreciate the differentiator of the separation of their advice from the product manufacturing and custody. RPg Family Wealth Advisory is an independent multi-family office advisory group that provides comprehensive family wealth planning strategies and fiduciary services through a professional cadre of experienced and dedicated financial advisors.
Prior to the watershed announcement of Morgan Stanley leaving the broker protocol, there was already a lot of talk in our industry about the differences between the two legal standards financial advisors and their firms are held to—the Fiduciary Standard and the Suitability Standard. The Department of Labor (DOL) has been actively trying to mandate that anyone advising on retirement accounts adhere to a Fiduciary Standard as defined by the DOL. Currently, only independent Registered Investment Advisors(RIA) are required to act in a fiduciary capacity and it applies to every account type.
Suitability vs. Fiduciary
T
he Fiduciary Standard of care is the highest standard of care at either equity or law. A Fiduciary is expected to be loyal to the person to whom he owes the duty (the “principal”) such that there must be no conflict of duty between fiduciary and principal. The Fiduciary Standard is often described as always putting the client’s interest before the advisor’s. It also means disclosing any possible conflicts of interest including compensation related to products or referrals.
Under the Suitability Standard of care, an advisor need only suggest products that are suitable for client objectives, income level and age. Also, possible conflicts of interest are not required to be disclosed. Firms are free to find more ways to monetize the client relationship without paying the advisor, some examples include: trading, spreads on cash, loans, investment management distribution fees, minimum account fees, administrative fees, etc. Firms held to the suitability standard may incentivize brokers to sell particular products during sales campaigns as well.
There’s been a lot of media attention around the Fiduciary Standard as the DOL has been seeking approval of the Fiduciary Standard within the suitability world when advising on retirement assets. We think this is a great idea, but why stop at the retirement account? Wouldn’t it be ideal if your advisor were held to the Fiduciary Standard when considering investments for a joint account, a Trust and/or life insurance and annuities?
RPg FAMILY WEALTH ADVISORY, LLC 25 BURLINGTON MALL ROAD | SUITE 307 BURLINGTON, MA 01803 (781) 547-8660 WWW.RPgFAMILYWEALTH.COM
Today, clients are aware of the benefits of getting their advice from an advisor who must act in their best interest. However, there’s still confusion as to what type of practitioner they are dealing with, so clients must do their own diligence and go beyond the financial plan and investment allocation into the compensation structure of the advisor they are interviewing or currently working with. At some point, we will have a defining moment when all clients scrutinize the complexity of having an advisor who is acting in their best interest on certain types of accounts but not on others. We believe this will contribute to the continued growth of the independent Registered Investment Advisor industry.
Other factors driving the growth of the RIA marketplace include how clients want to interact with their financial professionals. We are starting to see clients ask if the product manufacturing is separate from the advice and custody. As well, technology is changing the advisor-client interface making it easier for advisors to aggregate all assets for reporting purposes, including integrated financial planning software and sophisticated trading technology, to name a few.
We hope this helps clarify the complexities of the ever-changing marketplace. If you would like to discuss any of these concepts, please reach out to a financial advisor at RPg Family Wealth Advisory. As trusted family wealth advisors who have chosen to operate at the Fiduciary Standard, we are dedicated to helping our clients plan well, invest well and live well.
IMPORTANT DISCLOSURES
RPg Family Wealth Advisory, LLC (“FWA”) is a registered investment advisor with the U.S. Securities and Exchange Commission (SEC). Additional information regarding RPg Family Wealth Advisory, LLC can be found on our website at www.rpgfamilywealthadvisory.com.
RPg Family Wealth Advisory, LLC does not provide tax or legal advice. Please consult an independent tax advisor for additional guidance.
This material has been prepared solely for informative purposes and is not to be considered investment advice or a solicitation for investment. Any projections, market outlooks, or estimates in this presentation are forward-looking statements and are based upon certain assumptions and should not be construed as indicative of actual events that will occur.
Information contained in this report is as of the period indicated and is subject to change. The Information contained herein includes information obtained from sources that are believed to be reliable, but are not independently verified. It is made available on an “as is” basis without warranty.
This material is proprietary and may not be reproduced, transferred or distributed in any form without prior written permission from FWA. FWA reserves the right at any time, and without notice, to change, amend, or cease publication of the information contained herein.
Performance provided is past performance. Past performance is not indicative of future results. Investments may increase or decrease in value and are subject to a risk of loss. Statements in this piece that reflect projections or expectations of future financial or economic performance of the markets in general are forward-looking statements. Actual results or events may differ materially from those projected, estimated, assumed or anticipated in any such forward-looking statements. Any views expressed in this report are those of the author(s) at the time of writing and are subject to change without notice.
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With more than 25 years of investment, portfolio and wealth management experience, David joined RPg Family Wealth Advisory in 2011. Prior to joining the firm, David was the Managing Director of the Twin Lights Group of Morgan Stanley Smith Barney, which specialized in the creation, implementation and management of standard and customized hedge fund portfolios.
Throughout his career, David has built a reputation and track record based upon principles, expertise and client values. For the past 14 years, David has been customizing tactical strategies for his clients’ portfolios. He was an early adopter of Alternative Investments as a means to smooth volatility and enhance portfolio performance and served as a regional specialist for Alternative Investments at Morgan Stanley Smith Barney. Earlier, David earned the distinction of the Private Wealth Associate designation within Citi Family Office, an internal honor that was shared by fewer than 2% of the advisors at MSSB.
David earned a B.S. in Business Administration from the University of Massachusetts, Lowell. Born and raised in New York City, David resides in Winchester, Massachusetts with his wife and three children.
Brandon Lamb
Chief Compliance Officer
Brandon joined RPg Family Wealth Advisory in 2015 as Chief Compliance Officer. Brandon has more than 15 years of experience in Investment Advisor and Broker-Dealer compliance, operations and financial services. As Chief Compliance Officer, his responsibilities include managing regulatory compliance initiatives, working with industry regulators during routine exams, monitoring and administrating compliance policies and procedures. Prior to joining RPg Family Wealth Advisory, Brandon worked for Wellington Management as a regulatory analyst monitoring regulatory changes and their impact on the firm. Earlier, he was a Compliance Manager at Morgan Stanley. Brandon also served as a financial services registered representative at JPMorgan, Charles Schwab and The Vanguard Group. Brandon earned a B.S. in Kinesiology from Arizona State University. He resides in Boston with his wife and two children.
Robert D. McCauley
Chief Financial Officer
Robert joined RPg Family Wealth Advisory in February 2012 as Director of Accounting and Technology. Robert has more than 25 years of technology, accounting and operations experience. In his current role as Chief Financial Officer, his responsibilities include managing operations and fund accounting as well as overseeing technology implementation and utilization.
Robert launched his own consulting firm in 1997 to serve clients such as Kemper Financial, Zurich Investments and Abbott Laboratories, among others. Earlier, he worked in information technology consulting for Decision Consultants Inc. as Director of Field Services for the firm’s Chicago practice. He began his career at Arthur Andersen’s Professional Education and Development office in St. Charles, Illinois. Robert resides in the Chicago suburb of Geneva, Illinois with his wife and the youngest of their five children.
William T. Eaton, II, CIMA®
Senior Managing Director
Bill joined RPg Family Wealth Advisory in 2015 as Senior Director – Portfolio Management and Director – Wealth Management. Bill has more than 30 years of investment, portfolio and wealth management experience. Prior to joining RPg Family Wealth Advisory, Bill spent six years at Detwiler Fenton Investment Management as a Senior Managing Director and Senior Vice President and more than 25 years with UBS Financial Services (and predecessor firms Kidder Peabody and PaineWebber.) While at PaineWebber, Bill was the youngest Portfolio Manager in New England to be awarded PaineWebber’s title of Senior Portfolio Manager. He also qualified for the Advanced Financial Advisor Education Institutes – Investment Management Consultant (IMC) designation and has been named a multi-year Boston Five Star Wealth Manager (award winners announced in Boston magazine).
Bill is active in a number of community and charitable organizations, including the North Shore Hockey Club, Hamilton Wenham Youth Soccer Association, United Way of Mass Bay and North Shore United Way where he currently serves as Co-Chairman. Bill earned a B.A. in Economics and Political Science from Denison University. He resides in Hamilton, Massachusetts with his wife and two daughters.
Investment Management Consultants Association (IMCA®) is the owner of the certification marks “CIMA®,” and “Certified Investment Management Analyst®.” Use of CIMA® or Certified Investment Management Analyst® signifies that the user has successfully completed IMCA’s initial and ongoing credentialing requirements for investment management consultants.
Mitchell A. Goldfeld, CIMA®
Senior Managing Director
Mitch joined RPg Family Wealth Advisory in June 2015 as Director – Wealth Management and Director – Portfolio Management. Mitch has more than 20 years of investment and wealth management experience. Before joining RPg Family Wealth Advisory, Mitch spent six years as a Managing Director and Senior Vice-President at Detwiler Fenton Investment Management. Prior to that, he was a Vice President of Investments at UBS Financial Services Inc. In 2008, Mitch earned his Certified Investment Management Analyst (CIMA) designation through the Investment Management Consultants Association (IMCA) and, in 2014, his IMCA Advanced Investment Strategist Certificate in Portfolio Risk Management. He also was designated as a portfolio manager in UBS’ Portfolio Management Program and earned a certification in the firm’s Wealth Management Program. Mitch began his career as an Analyst at Goldman Sachs and later as a Research Analyst at Wellington Management. He is a supporter of several area music organizations and is an accomplished pianist. Mitch earned a B.S. in Economics (High Honors) from State University of New York at Binghamton, and earned his MBA in Finance from the Wharton School of Business at the University of Pennsylvania. He resides in Hamilton, Massachusetts with his wife and their three boys.
Investment Management Consultants Association (IMCA®) is the owner of the certification marks “CIMA®,” and “Certified Investment Management Analyst®.” Use of CIMA® or Certified Investment Management Analyst® signifies that the user has successfully completed IMCA’s initial and ongoing credentialing requirements for investment management consultants.
Ben Zimmer
Research Analyst, Portfolio Management Administrator
Ben joined RPg Family Wealth Advisory in July 2016 as a Research Analyst, Portfolio Management Administrator. As a Research Analyst, Ben is responsible for supporting the firm’s Investment Strategists with top-down and bottom-up research using both quantitative and technical research techniques. He also assists the firm’s Head Portfolio Trader by trading all portfolios. Prior to joining RPg Family Wealth Advisory, Ben worked at Tactical Allocation Group as Analyst/Junior Trader.
Ben is a Level I Candidate in the Chartered Financial Analyst (CFA®) program. Ben earned a B.S. in Communications from the University of Michigan while also serving for three seasons on the school’s football staff. Ben has also earned dual Master’s degrees in Business Administration (MBA) and Science in Finance (MSF) from Walsh College. He currently resides in Austin, TX.
James F. Peters, Jr.
Managing Director, Co-Chair Investment Committee
Jim joined Risk Paradigm Group in July 2016 as Senior Portfolio Manager, Co-Chair Investment Committee. Jim has over 40 years of experience providing financial advice to corporations, non-profit organizations and individuals. As Managing Director and Co-Chair Investment Committee, Jim is responsible for macroeconomic policy, which drives portfolio asset allocation decisions and is a member of RPg’s investment committee. Prior to joining RPg, Jim founded TAG, an independent Registered Investment Advisor. Prior to being an independent RIA, TAG was a boutique money manager within UBS Financial Services where Jim also served as a member of the firm’s national investment consulting services Advisory Council. Prior to that, he also worked at Kidder Peabody’s Detroit office as Director of 401(k) plans. Jim served as partner in charge of taxation, employee benefits and personal financial planning for the Detroit office of Pannel Kerr Forster, an international accounting firm, where he authored the firm’s national policy on investment strategy for client financial planning.
Jim earned a B.S. in Accounting with Minors in Economics and Philosophy from St. Louis University and earned his a Master of Science in Taxation (MST) from Walsh College. He is a Certified Public Accountant and a member of the American and Michigan Association of CPAs. Jim is also a published author, and was previously a frequent speaker and panelist at financial industry conferences and interview guest for television and print. He currently resides in Birmingham, MI.
Mariann C. Dube
Chief Administrative Officer
Mariann is the Chief Administrative Officer of RPg. She is responsible for the implementation of all administrative and operational activities for the RPg Asset Management. Prior to joining the firm in 2011, Mariann worked for Morgan Stanley Smith Barney as a coordinator for Alternative Investments and administrator for 16 years. She lives in Maynard, MA with her husband and their son.
John X. Donabedian
Director — Portfolio Management
With more than 29 years of experience, John joined RPg Family Wealth Advisory in 2015 as Director – Portfolio Management after a successful six years at Detwiler Fenton Investment Management. He started his career in public accounting with Herman & Herman CPAs and later worked at Arthur Anderson & Co. where he obtained the position of Senior Accountant. After eight years in public accounting, John went on to establish and manage a business-to-business services company. Upon the sale of his business in 2002, John pursued his passion for wealth management when he accepted a position with UBS Financial Services as a Financial Advisor. John joined TEG Partners while at UBS and then moved with the group to Detwiler Fenton Investment Management in 2009.
Fluent in Spanish and proficient in French, John earned a B.S. in Accountancy from Bentley University. He resides in Burlington, Massachusetts with his wife.
Deborah (Darby) B. Friend
Director — Wealth Management
Darby brings more than 30 years of experience to RPg Family Wealth Advisory, which she joined in 2015 as Director – Wealth Management. Before joining RPg Family Wealth, Darby served as Vice President –Wealth Management at Detwiler Fenton Investment Management. She started her career in wealth management more than 15 years ago when she joined Bill Eaton at Paine Webber (later UBS Financial Services) as an Investment Associate. While at UBS, colleagues Mitch Goldfeld and John Donabedian joined Bill and Darby to form The Eaton Group (TEG). While at UBS, Darby earned certification in UBS’ Wealth Management Certification Program. Darby attended Barnard College, Columbia University in New York. She currently resides in Newton, New Hampshire with her wife and their two rescue dogs.
Tactical Allocation Group Joins RPg Family Wealth Advisory
(Burlington, MA) July 28, 2016: RPg Family Wealth Advisory announced today the addition of Michigan based Tactical Allocation Group (TAG). “Jim Peters is an early adopter in the Managed ETF space and has built an exceptional reputation over the past 30 years. Jim joining RPg FWA strengthens our planning bench and compliments our current culture and mission. We are delighted to have Jim joining our team”, said David Gatti, CEO and CIO of RPg Family Wealth Advisory.
Jim founded TAG in 2006 to deliver thoughtful asset allocation models to his clients because he saw, early on, the many benefits of utilizing tools like Exchange Traded Funds within a Global Tactical Asset Allocation Model managed by experts.
“I am excited to be joining forces with RPg Family Wealth Advisory. I find the ability to deepen and diversify our resources, increase our communication and deepen our investment team very exciting. Our process has always been focused on providing our clients the best possible solutions and we feel this combination creates a better set of solutions for our clients”, said Jim Peters.
Important Disclaimer: Information contained in this press release is for informational purposes only and is not to be considered investment advice or a solicitation for investment.
TEG Advisors Joins RPg Family Wealth Advisory
(Burlington, MA) June 12, 2015: RPg Family Wealth Advisory announced today the addition of Boston based advisory team, TEG Advisors. “Bill, Mitch, Darby and John are a veteran advisory group with tremendous planning and investment expertise. I could go on about their individual professional accolades, but I find them to be even better people, which makes serving their advisory needs fun,” said David Gatti, CEO and CIO of RPg Family Wealth Advisory.
TEG has an extensive background in portfolio management based off a philosophy that started with Bill Eaton in the late 1980’s. The team is deeper and more sophisticated today as they have attracted industry veterans Mitch Goldfeld, Darby Friend and John Donabedian. TEG delivers a number of investment management strategies to their clients to help them achieve their stated investment goals.
“We are very excited to be joining RPg Family Wealth Advisory. We are both philosophically and culturally aligned with RPg. RPg can fully support the diverse investment management needs of our clients along with helping us deliver robust planning capabilities. Our team approach and RPg’s progressive view of the Wealth Management industry are complimentary and will help us service our clients better than ever,” said Bill Eaton.
Important Disclaimer: Information contained in this press release is for informational purposes only and is not to be considered investment advice or a solicitation for investment.
