Bear Market Crimps Advisor Income

A new survey suggests that the bear market has forced the average planner to work harder for less money.

The survey, 2003 Survey of Trends in Financial Planning, by the College for Financial Planning in Greenwood Village, Colo., found that planners felt they were doing twice as many financial plans as they were a year earlier.

Yet the survey also found that client assets and earnings were down. Survey respondents, all of whom are CFP certificants and members of the FPA, reported their median assets under management fell to $23 million in 2003 from $28 million in 2002. During that same period, median gross earnings dropped to $140,000 from $200,000, according to the survey; 73% said their income increased after receiving CFP certification.

Those planners who are relatively new in the business did manage to make some gains. For planners with one to five years experience, the median gross earnings for 2003 was $65,000, up from $50,000 a year earlier. For the most experienced planners, those with 21 to 25 years of experience, median gross income dropped, to $203,000 in 2003 from $300,000 in 2002, according to the study.

The survey also found a decline in the percentage of planners providing fee-only or commission-only services, and an increase in those using a combination of fees and commissions. Fee-only planners constituted 22% of respondents in 2003, compared with 26% in 2002. Fee and commission planners, meanwhile, constituted 61% of respondents, up from 57% in 2002. The study also noted a reduction in commission-only planners, with 7% this year and 11% in 2002. For those planners who charge an hourly rate, there was no change in the median $150 hourly fee reported in 2002.

In addition to seeing changes in earnings, planners also saw changes in their clients' lifestyles as well. Respondents said their typical client in 2003 is a one-income family with a breadwinner between the ages of 45 and 64. A year earlier, planners said their typical clients were in the same age range, but were two-income couples.

Planners saw little change in their clients' gross incomes in 2003, remaining at a median of $100,000, but they did indicate a slight increase in net worth and discretionary income. The median net worth of the typical client went to $750,000 from $650,000, and median discretionary income to $20,000 from $15,000.

The survey consisted of written responses from 412 randomly chosen FPA members and CFP certificants, which were received out of an initial mailing of 2,500 survey forms. The survey was conducted in September.


Brown To Head New Brokerage Association

Broker-dealers are moving ahead with their plans to exit the Financial Planning Association (FPA) and form an independent association of their own.

The FPA has announced that broker-dealers will officially launch their own independent organization at the FPA's Broker-Dealer Conference, which will be held January 22-24 in Huntington Beach, Calif. The new organization will unveil its goals, name and logo at the conference, organizers say.

Organizers of the new and still-unnamed association also announced that Dale E. Brown, most recently associate executive director of the FPA, will serve as chief executive officer and executive director of the broker-dealer association. Brown will be responsible for leading the new association's advocacy efforts and overseeing all aspects of the organization.

"Dale's experience in financial planning and his long-time service to the broker-dealer community will be an invaluable resource to the new organization," says Tony Batman, chair of the FPA's Broker-Dealer Advisory Council and of the new organization's steering committee.

The separation of the FPA and some 100 broker-dealer members was disclosed by the FPA in early September. Under the plan, the FPA will financially help the new organization during a transition period that may last a year or more.

FPA officials say one of the driving forces behind the proposal is a desire by broker-dealers for an advocacy operation more tailored to their specific regulatory and legislative needs. Another issue has been the divergent interests of the FPA's financial planner practitioners and broker-dealers. The FPA, for example, has been an aggressive advocate of making the CFP mark a defining credential for FPA membership, despite the fact that many broker-dealer reps do not hold the certification. The FPA also has lobbied against the broker-dealer exemption to the Advisers Act of 1940, putting it squarely in opposition to its broker-dealer members.

Broker-dealer members, according to FPA officials, contribute about $500,000 annually to the FPA's budget, representing about 3% of the organization's annual revenues.

Harris Rechristens myCFO

One year after completing its acquisition of myCFO, The Harris Bank is remaking and even renaming the once high-flying former Silicon Valley start-up designed to offer financial advice for tech zillionaires. But the name change was subtle and inexpensive: Harris left the CFO acronym the same and changed the words behind the letters, from my Chief Financial Officer to my Comprehensive Family Office.

But exchanging the word "chief" for "comprehensive" isn't simply an exercise in semantics. The firm, which currently employs about 125 financial professionals and serves 100 families, is being retooled to stress a consultative and comprehensive approach.

At the top of its list is coordinating tax and estate planning with its investment services; some of myCFO's clients are families with $100 million in assets and 15 to 25 different tax entities. "The level of complexity [of their financial lives] has increased exponentially," says Jeff Roush, senior managing director and COO of The Harris RIA Holdings. "It requires the coordination of multiple influences like CPAs and tax attorneys to manage their portfolios. Our role is to add simplicity to this complexity."

As Roush sees it, the family office business is going through a period of definitional change and evolution. Competitive pressures are intensifying and forcing some concerns to rethink their strategies.

For example, the Rockefeller family office is attempting to move down-market to leverage its resources and the Johnson family office (of the health-care giant) recently rolled out its investment platform to non-family members. Other firms like Bessemer Trust "have recognized the need for growth and scale to be profitable," Roush explains.

But other family offices are wrestling with the problem and finding there are no easy answers. "MyCFO doesn't have these legacy issues," Roush says. "Our clients embrace our open architecture structure and the objectivity it entails."

Only a few months after it acquired myCFO in the fall of 2002, Harris opened its wallet again in early 2003 and purchased Sullivan Bruyette Speros & Blayney (SBSB), a McLean, Va.-based financial advisory firm with about $700 million in assets under management. The rapid series of transactions prompted many to speculate that Harris might become a serial acquirer and start gobbling up other advisory firms.

It didn't happen, though Roush isn't ruling out more acquisitions. "We're being selective about who we have conversations with," he says. "We're always looking for good partners, but the fit has to be right. SBSB wasn't necessarily that interested in being acquired until we both realized the fit was there."

Ameritrade Buys Bidwell, Adds 88 RIAs

Ameritrade Holding Corp. has added $5 billion in assets and 88 RIAs to its custodial business with the purchase of a Portland, Ore.-based broker-dealer for $55 million in cash.

Ameritrade says it expects to close on its deal to buy Bidwell & Co.-including its RIA division, Bidwell Institutional, and a corporate services division-sometime in early 2004. "We are committed to growing our business, and we will do that both organically and through acquisition," says Ameritrade spokeswoman Katrina Becker.

Bidwell was founded in 1984 by Gerald Bidwell, who remains sole owner of the company. It is based in Portland, with a branch office in Beaverton, Ore., with 60 employees in total and 88 non-affiliated RIAs who rely on Bidwell Institutional, Becker says.

The Oregon firm has $5 billion in customer assets and 100,000 client accounts. Its RIAs manage $545 million in assets. With the purchase, Ameritrade will have a total of $66 billion in customer assets and 3.1 million customer accounts.


The average annual total returns for the Al Frank Fund as of September 30, 2003, were as follows: third quarter, 17.07%; one year, 59.41%; three years, 9.61%; five years, 23.42%; and life of the fund (from 1/02/98), 14.56%. The performance figures were incorrect in a story about the fund that ran in the November 2003 issue.

Also in the November issue, an article on new software developments should have stated the typical licensee will pay $400 for the Monte Carlo module for Financial Profiles ( product, Profiles+ Professional v7.0. The price of the Monte Carlo module was incorrect.

BONY Opens New Lockwood 'Supermarket'

Advisors are being offered access to a new "supermarket" of about 8,700 mutual funds.

Lockwood Advisors Inc., a subsidiary of The Bank of New York, says its new fund access program will consist of 1,400 funds with no transaction fees and 7,000 funds with fees.

Advisors can select two levels of service, according to Lockwood Advisors. The Fund Access level provides access to the funds, automatic processing of fees and an online order-entry form. The Fund Access Plus program also offers a Web-based advisor workstation and consolidated performance reporting.

The new program is part of an effort by Lockwood to expand beyond the separately managed accounts that were its bread-and-butter before it was acquired by The Bank of New York.

Lockwood already has added to its offerings this year a suite of registered hedge funds, mortgages, a passive municipal fixed-income product, a mutual fund wrap program and an overlay separate account program.

Of the most recent offering, Lockwood Advisors President Christopher W. Tomecek says, "We built this 'supermarket' approach so that independent financial advisors can position their clients' mutual fund holdings on the same platform and reporting system as their separate account portfolios."

He says he envisions advisors using the mutual fund platform for smaller accounts. "As the portfolios mature, (advisors can) migrate their clients into more customized, tax-efficient vehicles without moving them to a different platform," Tomecek says.

Wagner Receives Fain Award

Richard Wagner, considered a pioneer when it comes to delving into the philosophical aspects of planning, has been awarded the Financial Planning Association's P. Kemp Fain Jr. award for 2003.

Wagner received the award at the FPA's annual Success Forum, held November 1-4 in Philadelphia. In accepting the award, Wagner said he considered himself lucky to be a part of the birth of the financial planning profession.

"It's the first authentic new profession to emerge in 400 years," he said.

He also reminded planners of the important role they play in the lives of their clients. Planners help clients direct "this force of money that affects all our lives; it's the most powerful and pervasive secular force on the planet."

"If you think about the implications of what we're all about ... it's just wonderful," he said.

The P. Kemp Fain Jr. award recognizes an individual member who has made outstanding contributions to the financial planning profession in the areas of service to professional activities, society, academia and/or government and upholds FPA's core values of integrity, competence, relationships and stewardship, according to the organization.

"Dick's pioneering spirit in the field of financial planning helped the profession grow in recognition and appeal to the public," says FPA President David Yeske. "He was instrumental in the evolution of personal finance and the growing focus on the psychology of money."

Wagner co-founded "The Nazrudin Project," a professional think tank devoted to discussions and mutual support regarding the human and spiritual aspects of money and personal finance. He is currently working with Naropa University to establish a course on Wealth, Money and Meaning and serves as editor-at-large for Financial Advisor. He is also working on his first book, The Money Forces: Inside and Out.

FPA, ING Team Up For Ad Campaign

The Financial Planning Association (FPA) is teaming up with ING in an advertisement campaign that will put the spotlight on highly regarded financial planners.

The campaign, entitled "A Fresh Approach," will highlight selected planners in two-page ING "advertorials" that will appear in Money magazine each month. There will be ten ads over the next year, each focusing on a different planner, says Tricia Conahan, senior vice president and head of brand development at ING.

Winners will be selected based on their efforts in helping clients as well as their communities, she says.

"ING created this program and joined forces with the FPA to highlight financial planners who go above and beyond to help people reach their financial goals," Conahan says. ING will pay for the advertisements, she adds.

FPA officials say they view the partnership as a good way to educate the public on the valuable work done by financial planners. They note Money magazine puts out about 8 million issues per month.

The first planner to be spotlighted is Clare Stenstrom, principal of Bourne Stenstrom Capital Management in Bedford Hills, N.Y., who played a large role in creating FPA's financial planning relief services in the wake of the September 11 terrorist attacks.

"Through the series of ads, the public will see how financial planners give back to their communities and provide extraordinary service to their clients," says FPA President David Yeske.

Nominations are being accepted at An independent committee selected by Money magazine will make the selections.