Data & Research August 7, 2007

Paper Examines Liability and Business Opportunity from Advice

A new white paper from the Principal Financial Group offers a perspective on the new role of a fiduciary adviser.
Reported by

The paper, “Pension Protection Act of 2006: Is An Expanded Fiduciary Role The Right Choice For Financial Professionals?’, offers help for financial professionals in understanding the new investment advisory role and determining if the potential liability is worth the increased business opportunity. It suggests potential strategies for financial professionals who wish to capitalize on these opportunities are either defensive (protecting the adviser from liability) or offensive (geared toward expanding business).

According to the paper, defensive strategies include:

Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.

  • Staying ahead of the curve by studying the anticipated regulations to stay abreast of changes and gain a thorough understanding of their impact, and
  • Positioning expertise in terms of consulting plan sponsors on the implications of the Pension Protection Act (PPA), rather than actively providing investment advice to participants.

Offensive strategies include:

  • Actively promoting past experience and track record as an investment adviser,
  • Adding an educational component to seminars and presentations that demonstrates knowledge of the PPA to plan sponsors and participants, and
  • Partnering with an organization that has extensive expertise in assisting plan sponsors with the design and implementation of retirement plans.

In addition, the white paper examines key issues surrounding the fiduciary role, such as:

  • Consumers’ growing need for investment advice,
  • The newly created role of the fiduciary adviser and duties of a fiduciary,
  • Compensation and fee guidelines,
  • Disclosure and audit requirements, and
  • Requirements related to the use of computer modeling in providing investment advice.

The Principal white paper is available here.

Products August 7, 2007

New Company Protects against Broker Misconduct and Scams

Former Securities and Exchange Commission (SEC) Enforcement Branch Chief and consumer advocate Pat Huddleston has launched Investor's Watchdog, a company that provides investors with intelligence and expertise to protect them from broker misconduct, excessive risk, and professionally-disguised investment scams.
Reported by

Investor’s Watchdog provides consumers with information about individual brokers, the employing firm’s reputation for supervising its brokers, and the promoters of unregistered investments that can be professionally disguised scams, according to the announcement. Additionally, the Investor’s Watchdog Web site – www.investorswatchdog.com – provides users with various educational resources for practical advice and information related to protecting investments.

The Investor’s Watchdog Broker Safety Rating is a scoring system that blends Huddleston’s SEC-trained analysis with brokers’ education, employment history, and disciplinary record, the announcement said. The Investor’s Watchdog Database includes information on actions against stockbrokers that will not appear on reports issued by the Financial Industry Regulatory Authority (FINRA), including actions expunged from a broker’s FINRA file and the results of customer surveys completed by other Investor’s Watchdog customers who have used the same broker.

Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.

Services provided by Investor’s Watchdog include:

  • BrokerSnapshot Report – provides a one-time, complete background of the broker and includes the Investor’s Watchdog Broker Safety Rating
  • QualifEye Report – provides background and recommendations to anyone considering a hedge fund, limited partnership or other non-registered investment
  • Winnow Service – provides quarterly updates and Broker Safety Rating reports that can reveal troubling broker behavior before it reaches the client’s account
  • WinnowPlus Service – provides immediate phone and/or e-mail communication to discuss red flags that are uncovered in the quarterly Winnow report, and
  • Constant Patrol Subscription – provides monthly Broker Safety Rating reports, one QualifEye analysis per year, daily searches of the Investor’s Watchdog database, and instant notification of new information about the broker

Huddleston launched the company with the belief that investment fraud is set to reach unprecedented levels, given the coming boom in retirees and senior citizens, many of whom have built significant resources, and that the advice most often given for how to check a stockbroker’s background is somewhat flawed because a record that looks clean may be “whitewashed.’

«