Advisers Report Doing More for Less

Advisers, particularly in the wirehouse channel, have seen cutbacks in support and compensation in the last year, according to a report from the Financial Research Corporation (FRC).

Margaret Rorick, senior vice president and director of market research at FRC, calls it the “adviser pinch.” She told PLANADVISER.com: “They are doing a lot more work and they are doing it for less money.”

Some channels are feeling more of the pinch than others, the FRC research found. Across all channels, 40% of advisers said their firm has reduced the number of support staff in the last year. That number is more startling at the wirehouses, where 60% of advisers have cut back support staff. In contrast, only 16% of registered investment advisory (RIA) firms have cut back on support staff.

Almost a third (31%) of advisers in all channels has cut back the marketing or support budget. Wirehouses and banks were most likely to see cuts (43% and 45%, respectively), and independent advisers and RIAs saw not as many cuts (23% and 21%, respectively).

As assets shrunk, some advisers also experienced belt-tightening in their compensation. More than a fourth of advisers (27%) saw reduced bonuses or compensation structures in the last year. Wirehouse advisers were again mostly likely to see those cuts (44%), versus advisers at regional (30%) and independent (15%) broker/dealers and RIAs (19%).

Rorick notes that, despite less resources and compensation, many advisers in are finding parts of their business more time-consuming. More than half (61%) of financial advisers reported that more time is required in the last year for meeting with clients in person or on the phone. More than half (56%) of advisers have also seen longer sales cycles, or the time it takes to close new business, according to the FRC data.

Another 41% of respondents reported that more education and research is needed when selecting new investments. Because of changes in the marketplace and questions around transparency, products like mutual funds and variable annuities “require more homework than they used to,” said Rorick.

The study, conducted with Harris Interactive, surveyed about 1,200 advisers in April and May.


“The State of the Financial Advisor Marketplace” can be purchased at frcnet.com .

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Retirement Plan Assets Used to Pay for Drugs

U.S. District Judge Deborah K. Chasanow has sentenced Alan Neal Mates of Weston, Florida, to a year and a day in prison followed by three years of supervised release for conspiracy to commit money laundering.

United States Attorney for the District of Maryland Rod J. Rosenstein announced that, according to his guilty plea and testimony at court proceedings, beginning in at least 1999, Mates agreed to act as an intermediary between Christopher Denison, who lived in Maryland and wanted to illegally purchase oxycodone and valium, among other controlled substances, and a person who lived in Florida who would provide the drugs. Specifically, Mates agreed to accept the drugs that the supplier would mail to him and send them to Denison, and received cash from Denison to pay for the drugs and Mates services.

According to the announcement, initially, Denison sent personal funds to pay for the drugs, but as he ran out of money, he devised a scheme to divert funds from his employer’s retirement plan to pay for the drugs. Denison, who was manager of the retirement plans for the company, identified members of the retirement plan whose plan statements were returned as undeliverable and changed their dates of service to ensure they would appear to be vested in the plan and entitled to distribution of retirement income.

He then changed the members’ name and mailing address in the company’s computer system to names and addresses provided by Mates, including his mother and an employee, and sent them checks for distributions from the retirement accounts. Mates laundered more than $200,000 over the course of the conspiracy.

The announcement said Denison pleaded guilty to theft from an employee benefit plan and was sentenced to four months in jail, followed by six months of home detention.

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