BROWSE BY TOPIC
- Investments - Strategies
- Investor Protection
- Investments - Private
- Investments - Unsuitable
- Regulatory Sanctions
- Rules & Regulations
- Bad Advisors
- Bad Brokers
- Boiler Rooms
- Wall Street News
- Terminations/Cost Cutting
- Compliance Concepts
- General News
- Donald Trump & Co.
- Big Banks
Stories of Interest
- Sarah ten Siethoff is New Associate Director of SEC Investment Management Rulemaking Office
- Catherine Keating Appointed CEO of BNY Mellon Wealth Management
- Credit Suisse to Pay $47Mn to Resolve DOJ Asia Probe
- SEC Chair Clayton Goes 'Hat in Hand' Before Congress on 2019 Budget Request
- SEC's Opening Remarks to the Elder Justice Coordinating Council
- Massachusetts Jury Convicts CA Attorney of Securities Fraud
- Deutsche Bank Says 3 Senior Investment Bankers to Leave Firm
- World’s Biggest Hedge Fund Reportedly ‘Bearish On Financial Assets’
- SEC Fines Constant Contact, Popular Email Marketer, for Overstating Subscriber Numbers
- SocGen Agrees to Pay $1.3 Billion to End Libya, Libor Probes
- Cryptocurrency Exchange Bitfinex Briefly Halts Trading After Cyber Attack
- SEC Names Valerie Szczepanik Senior Advisor for Digital Assets and Innovation
- SEC Modernizes Delivery of Fund Reports, Seeks Public Feedback on Improving Fund Disclosure
- NYSE Says SEC Plan to Limit Exchange Rebates Would Hurt Investors
- Deutsche Bank faces another challenge with Fed stress test
- Former JPMorgan Broker Files racial discrimination suit against company
- $3.3Mn Winning Bid for Lunch with Warren Buffett
- Julie Erhardt is SEC's New Acting Chief Risk Officer
- Chyhe Becker is SEC's New Acting Chief Economist, Acting Director of Economic and Risk Analysis Division
- Getting a Handle on Virtual Currencies - FINRA
We seek to provide information, insights and direction that may enable the Financial Community to effectively and efficiently operate in a regulatory risk-free environment by curating content from all over the web.
Stay Informed with the latest fanancialish news.
NEWSLETTERS & ALERTS
Raymond James Clients With Inactive Advisory Accounts
by Howard Haykin
Like most brokerage houses, Raymond James & Associates and Raymond James Financial Services (“RJ Advisers”) offer services to brokerage customers and advisory clients. While brokerage customers typically just pay a commission and other fees whenever trades are executed in their accounts, advisory clients will pay an asset-based fee and other nominal charges to have their portfolio separately managed throughout the year.
INACTIVE ADVISORY ACCOUNTS. Financial advisers at RJ Advisers are supposed to “regularly monitor” client accounts for trading activity - to determine whether they're receiving sufficient investment advisory services to justify remaining in a fee-based advisory account. Accounts that have no trading over a 12-month period are labeled “inactive” and, in such cases, financial advisers should then consider if keeping a client in an inactive advisory account is suitable, or if the client should consider moving to a brokerage account. After all, why pay for services that aren’t being used?
The Securities and Exchange Commission (“SEC”) drecently conducted an examination which disclosed that RJ Advisers had failed to conduct a suitability review for “Inactive” accounts over a 5-year period – from 2013 to 2017. After being informed of their oversight, both Raymond James firms conducted suitability reviews, which led to the following actions:
- 1,703 inactive advisory accounts were converted to brokerage accounts;
- 2,112 inactive advisory accounts were closed.
- RJ Advisers paid fines and agreed to fully compensate clients for any excessive advisory fees they were charged.
CLIENT AWARENESS. ”Inertia” is the tendency to do nothing or to remain unchanged. And inertia is many investors will remain in separately managed, fee-based accounts, even though they no longer utilize those services to the fullest extend.
So, I'm suggesting that investors break their inertia and develop a greater awareness as to what's happening in their accounts - and reduce their reliance on brokerage firms and brokers, which by nature are incentivized to maximize cash flows (i.e., to retain higher fees, wherever possible). If such a task is too tedious or beyond your their comfort level, don't despair. Seek out a ‘financial watchdog’ who can serve as your 'second set of eyes and ears' while having your best interest at heart.
[For further details on this case, click on SEC Press Release.]