The conversion services include upfront consulting to develop a strategy, development of a tactical plan, and hands-on operational support to help firms minimize impacts on their investor clients. FundQuest has experience in the conversion of fee-based brokerage accounts to advisory accounts and can customize an approach to assist with each individual firm’s unique set of trade-offs, a company announcement said.
FundQuest has automated as many processes in the conversion of these accounts as possible and, according to the announcement, offers:
- An advanced platform with both discretionary and non-discretionary advisory account options and supporting investment due-diligence,
- Online creation of client agreements to facilitate straight-through-processing,
- Online diagnostic profiling tools to address suitability,
- Electronic generation of investment policy statements,
- Daily and quarterly electronic reporting to support required annual reviews, and
- Open architecture investment options including: UMAs, SMAs, mutual funds, ETFs, and model portfolios.
In April, in its decision in Financial Planning Association (FPA) vs. the Securities and Exchange Commission (SEC), the U.S. Court of Appeals for the District of Columbia Circuit said the SEC had overstepped its authority in issuing the 2005 rule – called the Merrill Lynch rule – exempting from strict disclosure requirements certain broker-dealers who offer investment planning advice (See SEC “Merrill Lynch Rule’ Governing Advice Struck Down).
The SEC filed a stay of the ruling, which was to go into effect on May 21, 2007, asking for more time to transition the accounts (See SEC Asks Court for Stay on Overturned Merrill Rule). The SEC said the ruling affects an estimated one million fee-based brokerage accounts holding an estimated $300 billion.