FINRA Increases Enforcement

FINRA stepped up its game last year, issuing more disciplinary actions and making a number of investments to increase the scope of its regulatory oversight.

FINRA brought a total of 1,541 disciplinary actions, levied more than $69 million in fines and ordered restitution of $34 million to investors in 2012, according to its newly released annual report. This compares with 1,488 disciplinary actions, $71.9 million in fines and $19.4million in restitution ordered in 2011. The average fine in 2012 was $92,700, down from $98,100 the prior year.

The regulator reported that it had expelled 30 firms, barred 294 individuals and suspended another 549, compared with 21 firms expelled, 329 individuals barred and 475 suspended in 2011. Meanwhile, the number of investor complaints received dropped to 2,785, which was just over half of the peak of 5,405 complaints in 2008. - Mason Braswell

NAPFA Changes Membership Rules

A NAPFA membership rule change has provoked criticism for the way the decision was reached and communicated.

In a set of changes, the organization changed its membership requirements and eliminated its "provisional" membership status - effectively changing the status of 17 of its members.

The affected members were informed by email of their change in status to affiliate from provisional, the organization says. Those members will no longer be included in NAPFA's Find An Advisor referral system - one of the organization's most valuable benefits.

Some advisors were upset with the way NAPFA handled the change, voicing criticism on their Twitter feeds. "I can understand NAPFA's rationale for tightening membership standards," said Brent Perry, founder of Piedmont Financial Advisors in Indianapolis, whose NAPFA membership was not affected by the rule change. "But there was no prior notice, no discussion and no prior communication to all members," he added. - Charles Paikert

Raymond James Nabs Pittsburgh Team

Raymond James has lured a six-advisor team with more than $350 million in client assets to its independent channel.

The Pittsburgh-based team, which came to Raymond James from Hunter Associates and now operates as Shorebridge Wealth Management, generated $1.6 million in annual commissions and fees. The group is led by Winfield Smathers and Fred Miller, who are both founding partners and managing directors.

"We're pleased to welcome this exceptional team," Raymond James President Scott Curtis (pictured above) said in a statement. "Their industry experience, business model, and commitment to their clients' needs and interests fit well with the values and culture of Raymond James." - Paul McCaffrey

Should You Abandon Small Accounts?

Should advisors leave their smaller accounts behind when they switch firms? Definitely, says PriceMetrix, the Toronto-based research and practice management software firm. Not necessarily, say some top industry executives.

The average household with less than $100,000 in investable assets pays their financial advisor about $30 per month, according to PriceMetrix's Small Households Metrics report. "This return is hardly enough to cover basic account costs, and barely enough to justify time spent with the client," says Amrita Mathur, PriceMetrix marketing director. "The result is a considerable strain on profitability and a threat to the value proposition of a full-service firm."

But industry executives caution: Don't be so fast to ditch clients with smaller accounts. Clients with fewer assets may simply be younger with the potential to grow, says Brent Brodeski, CEO of Rockford, Ill.-based Savant Capital Management. And less wealthy clients may also be in a position to refer bigger clients, he adds. - Charles Paikert


In the charts accompanying the story on the annual FP50 survey in the June issue, the percentage of Raymond James Financial Services' accounts with more than $100,000 should have been 33%, not 82%.

In "Single Plays" in the June issue, when comparing bonds from Torchmark and Georgia-Pacific, the yield to maturity of the Georgia-Pacific bond should have been 3.3%, not 3.1%. Also, the article should have assumed a bond with a face value of $100,000, not an initial investment of $100,000.