PLANNING PATENT DISPUTE
Do the patented portfolio allocation and goal-planning methods that power MoneyGuidePro, the popular financial planning software, belong exclusively to Wealthcare Capital Management? Yes, says David Loeper, founder and chief investment officer of the firm.
He was alarmed when one of his advisory firm clients mentioned that advisors from UBS Financial Services were using it, since UBS does not subscribe to the Wealthcare process. "We've had advisors come to us and say, 'Do you see how this copies your system?' " Loeper tells FP. "There is strong evidence of them infringing on the patent."
Wealthcare Capital Management-which received two patents on its methods - filed a patent infringement lawsuit soon after in federal court against UBS, claiming the firm was using and profiting from its methods. Wealthcare Capital, based in Richmond, Va., provides a range of asset management and advisory services. It is seeking monetary damages and wants UBS to stop using the system.
It's unclear how much revenue UBS is generating, but Loeper claims some firms pull in as much as $500 million a year from it. UBS declined to comment.
Wealthcare's goal-based approach allows advisors to try to give their clients confidence in meeting or surpassing their financial targets without making big lifestyle sacrifices and while avoiding undue risk. Advisors can use the Wealthcare method to build a recommended portfolio allocation and prioritize a set of goals based on several factors, including current assets and future savings rates.
Industry professionals are split over whether Wealthcare has a valid complaint. Some say the planning process is so common it's hard to justify assigning rights. "It's really an outrage the patent was granted," says Joel Bruckenstein, an expert on financial planning technology and president of Global Financial Advisors in Miramar, Fla.
Chip Roame, managing partner at Tiburon Strategic Advisors, disagrees. "I have been through the technology patent process, and it is hugely difficult to patent anything widely in use," he says. "I would assume that its process is unique and defendable."
Two former LPL Financial executives have started a consulting and recruiting firm, FirstPoint Partners, that specializes in helping planners join independent advisory firms. The group will serve breakaway brokers, but will also help place advisors among RIA, hybrid and other independent firms. San Diego-based FirstPoint will take a consultative approach to placing advisors.
"We know advisors make only one or two moves in their career," said CEO Scott Collins, one of the co-founders. "We want to make sure those moves are for the right reasons and are advantageous."
In their former roles, Collins and FirstPoint President Scott Miller, as well as FirstPoint Senior Vice President of Business Development Scott Montgomery, a former LPL recruiter, helped advisors whose revenue totaled more than $750 million make transitions.
ON THE MOVE
Advisor Partners appointed Daniel S. Kern as its president. A former Charles Schwab portfolio manager, Kern will oversee investment management, sales and client services at the firm. He will also steer the development and implementation of investment strategies offered to advisors and institutions. At Schwab, Kern selected and oversaw investment teams in traditional and alternative asset classes, managing funds of funds and individual equities. Kern also served as a fund company chief financial officer while with Schwab and has extensive experience overseeing third-party service providers. Kern succeeds Dennis Clark, who's now a managing director at California Investment Trust.
HoyleCohen, an independent wealth management firm, created a new practice within the firm focused on providing advice to women. Two advisors at the firm, Elisabeth Cullington and Janet Acheatel, will head the practice, called Wealth Design for Women. The new practice will take its clients through a comprehensive wealth management process that seeks to understand their attitudes about money and their priorities.
New York Life appointed Chris Ashe as senior vice president and chief financial officer of its retirement income security unit. Before joining the company, Ashe was vice president of financial and strategic planning at Prudential Annuities. -D.M.