AST Trust Purchases Capital Trust Co. Of Delaware
AST Trust Company, a division of American Stock Transfer & Trust
Company, has acquired Capital Trust Co. of Delaware, creating what the
Phoenix-based trust company calls that nation's fifth largest
"advisor-friendly" trust company with $19 billion in assets. Initially,
Capital Trust will continue to operate under its own name.
Capital Trust's former majority shareholder, CSC of Wilmington, Del.,
had put the trust company up for sale last year after it apparently
concluded that the business was not a sound strategic fit with CSC's
primary agent-of-record business. However, CSC did keep some of the
corporate trust business that Capital Trust had developed. No purchase
price was disclosed.
The new combined entity will operate offices in New York, Phoenix,
Wilmington, Denver and Portland, Ore. It will retain its status as a
Delaware-chartered trust company, allowing advisors and their clients
to continue enjoying the benefits of Delaware's favorable laws
governing trusts. Capital Trust's founder and original CEO, Jeff
Lauterbach, frequently cited Delaware trust law as an advantage of
affiliating with the company.
Greg Tschider, president of AST Trust, stresses that AST is buying the
entire company, including the Delaware charter, and there will be no
need for advisors to redocument their accounts. "I think what's
important to them [advisors affiliated with Capital Trust] and to their
clients is that there really is no disruption," he says.
He also notes that Capital Trust staff will remain intact, adding that
AST has signed a two-year lease, with an option for five years, on the
Delaware office currently occupied by Capital Trust. Among the services
that will be made available to Capital Trust advisors as a result of
the acquisition are retirement trust administration services.
Tschider says AST and Capital Trust have similar strategies and client
profiles, centered on services for "independent advisors and brokers at
wirehouses that allow them to leverage our solutions to gather more
assets." The acquisition of the Delaware charter will also bring
potential advantages, he says. AST operates under a New York charter.
He said he doesn't anticipate any changes in fees for Capital Trust
advisors. "The Capital Trust existing schedule is very consistent with
ours," he explains.
The AST technology platform will gradually integrate Capital Trust's
database, but it will be a transparent process for Capital Trust
advisors, he says. "Technology wise, we probably have a more robust
technology platform, in large part due to our size, so we plan to
integrate capital trust into our technology platform."
Intuit Poised To Release PortfolioMinder
Intuit Inc. is releasing PortfolioMinder, its new Web-based portfolio
management service for independent financial advisors.
Intuit is offing a limited introductory setup price of $495 (a $500
savings off the regular setup price) and $150 monthly subscription fee.
It was scheduled to be released by the end of February.
"PortfolioMinder combines two Intuit hallmarks, affordability and ease
of use, to give independent financial advisors a better way to manage
multiple client portfolios, present information in
professional-looking, AIMR-compliant reports, and offer better customer
service," says Intuit spokesman Chris Repetto.
Intuit has made a number of changes to the program since Financial
Advisor reported on an early beta version in November. When the final
version is released, the program will automatically download files
daily from Schwab Institutional. Shortly thereafter, automated
downloads from TD Ameritrade, NFS (Fidelity) and Pershing will be
available. Other companies are likely to follow.
Initial account setup has been partially automated. Rather than
manually setting up each account, advisors will be able to create
accounts with data downloaded from their custodians. Manual data entry
is still an option for those who need it.
A concern with the earlier version was the inability of some advisors
to understand the hierarchy of accounts.
Financial Advisor Plans Top RIA Ranking
Financial Advisor is launching a special annual ranking of independent
advisory firms that offer financial planning and related services along
with investment management. The new survey will debut in the magazine
this summer.
Approximately 1,800 firms will receive the survey this month. Eligible
advisory firms, which must have at least $25 million in assets under
management. The magazine's goal is to identify the largest independent
advisory firms in the country and to spotlight the characteristics and
practices that have made them successful.
Robert Casey, formerly the editor of Bloomberg Wealth Manager, has been
retained as a project consultant to help Financial Advisor develop the
survey and analyze the results. Discovery, a part of The Financial
Information Group Inc., based in Red Bank, N.J., will compile the
results.
"This is a survey we've wanted to do for a long time but we wanted to
do it right," says Evan Simonoff, editor-in-chief of Financial Advisor.
"Having known Bob Casey and the caliber of his work for 18 years, we're
lucky to have his input. Together with Nick Stuller and the folks at
Discovery, we've assembled a talented team that can turn this into a
reality."
Morningstar Workstation Available At TD Ameritrade
TD Ameritrade Holding Corp. is offering its institutional services
clients access to a branded version of Morningstar's Advisor
Workstation.
The workstation has been integrated into TD Waterhouse Institutional
Services' Veo technology platform, and is offered in several packages
at special rates for TD Waterhouse's clients.
TD Ameritrade Holding is the newly formed financial services parent
company formed through the merger of Ameritrade and TD Waterhouse. TD
Waterhouse Institutional Services is among the company's operating
units.
"Advisors deserve easy access to the industry's best products in a
format that helps them maximize efficiency," says Brian Stimpfl, senior
vice president of business solutions for TD Waterhouse Institutional
Services. "That's why we built Veo to be so flexible. In addition to
offering our own proprietary solutions, we can readily customize
industry-leading applications to fit our platform."
The Morningstar workstation is being touted by TD Waterhouse as a
time-saver for advisors, providing a unified data solution that negates
the need to pull data from multiple sources. According to TD
Waterhouse, its advisors say they spend up to 500 hours per year, or
about 10 hours per week, updating client data through the use of a
myriad of planning and analysis tools.
The integration of Morningstar's workstation into Veo reduces the need
for manual data entry, allowing subscribers to import client, portfolio
and custom household data into the Morningstar workstation. The
workstation can then analyze the data and prepare reports for client
meetings, according to TD Waterhouse.
The Morningstar workstation subscriptions range from a basic plan for
research and client portfolios to a broader package that includes sales
and planning tools. The basic plan includes a full range of Morningstar
research databases, including stocks, mutual funds, variable annuities,
closed-end funds and ETFs, according to TD Waterhouse. The higher-end
package includes tools that help advisors analyze and construct
portfolios, create customized hypotheticals and assess risk tolerance.
Rule Is 'First Step'
The so-called "Merrill Lynch Rule" that took effect in February and
exempts certain brokers from the full set of responsibilities that
registered investment advisors must follow is only a "first step,"
according to former SEC Chairman William Donaldson, who spoke February
2 at TD Ameritrade's annual advisor conference in Orlando, Fla.
Donaldson served as SEC chairman from 2002 until late 2005, when he
resigned under pressure from business lobbyists who felt he was pushing
regulatory reform too far.
Donaldson told advisors that the SEC has said a new study "is coming
down the pike" and it may end up as legislation. "That's the end game,"
he said. "The (Merrill rule) is a first step. The end game has not yet
been played."
Nonetheless, Donaldson called the Merrill rule "a good sales tool" for
advisors. The new rule "advances the distinctions between brokers and
advisors, between fiduciary and suitability," he added.
Donaldson also praised the entrepreneurial nature of the RIA
profession, while warning that a scandal could set the business back a
long way. "It's quite clear your industry has a great amount of energy,
drive and entrepreneurialism," he said.
However, that entrepreneurialism needs to be redirected internally to
create the "firms' internal DNA," he said. As entrepreneurs, advisors
need to "reconceptualize where you fit in within the industry," he
explained.
Donaldson warned advisors of the importance of maintaining high ethical
standards. "We've had too many independent RIAs who fudged performance
numbers, (exaggerated) performance results and cherry-picked
performance dates," he said.
Are Wirehouses Making Brokers Look Bad?
The so-called "Merrill Lynch Rule" exempting brokers marketing
fee-based accounts from crucial aspects of RIA regulation became
effective in February. But already many are asking how wirehouse
executives and their Washington lobbyists could have allowed their
sales networks to be defined in such a negative light.
Speaking at the Financial Services Institute meeting in San Diego on
January 25, Maryanne Smythe, formerly director of the SEC's Division of
Asset Management and now a partner at Wilmer Cutler Pickering Hale
& Dorr, addressed several issues raised by the rule.
During the five years that the rule was debated, the regulatory
environment changed dramatically. One change was that early in this
decade the SEC was outmaneuvered politically by New York Attorney
General Eliot Spitzer, who prompted the agency to "embrace the 'F'
(fiduciary) word with a vengeance."
Smythe noted that brokers have "all types of relationships with
clients" and acknowledged that she lobbied hard to remind regulators of
this fact. "You can take off your fiduciary hat as long as you say you
are not on (the clients') side."
Broker Exemption Suit Filings Set
The Financial Planning Association's lawsuit against the Security and
Exchange Commission's broker exemption rule is expected to move ahead
with filings starting in March.
The FPA announced that the U.S. Court of Appeals for
the D.C. Circuit has released a schedule of filings for the case.
The schedule is:
March 27: FPA to submit written brief.
April 11: Deadline for "friend of the court" briefs.
May 11: SEC must file response to FPA.
May 25: FPA must file response to SEC.
Oral arguments are expected in the summer and a
final decision possibly one to six months later, according to the FPA.
Among the groups expected to file briefs in support of the FPA are the
North American Securities Administrators Association (NASAA), the
Public Investors Arbitration Bar Association (PIABA), The Consumer
Federation of America and Fund Democracy.
The FPA is fighting a rule that exempts broker-dealers offering
fee-based services from regulations contained in the Investment
Advisers Act of 1940, the law that regulates registered investment
advisors.
The SEC rule allows exempt brokers to offer investment advice that is
"solely incidental" to their brokerage services. The FPA has argued the
rule confuses consumers and allows brokers to act as investment
advisors without being regulated as such.
Proponents of the rule say it will stimulate the expansion of fee-based services in the brokerage industry.