Practice

Rather than offer the complete lineup of a target-date series in their 401(k) plan, sponsors are selecting only those funds that fit the age and demographics of their employees. This could result in under-funded target-date funds that could put the entire lineup in jeopardy, according to a new report, “Trends in Date-Date Portfolios on Recordkeeper Platforms,” from Financial Research Corp.

Maribeth Kuzmeski, president of Red Zone Marketing, suggests financial advisors should embrace social media to promote themselves and find creative, meaningful ways to differentiate yourself from competitors.

As the financial markets hit investors with gale-force market dips, most advisors are telling their clients to drop anchor. And, at least in the short term, most investors heeded that advice as the Dow Jones Industrial average closed up more than 400 points Tuesday, just one day after losing more than 600 points, the sixth-largest, single-day decline in history.

SEC Slaps Mutual Fund Trader for Accepting Gifts From BrokersPrinter Friendly Email Reprints Reader Comments Share | August 9, 2011Chris KentourisThe Securities and Exchange Commission has upheld an administrative judge’s ruling that a mutual fund trader must pay more than $200,000 in penalties for accepting gifts from broker-dealers to steer trades their way.Like what you see? Click here to sign up for Securities Technology Monitor's weekly newsletter to get the latest news and analysis that matters to the effective operation of capital markets.The regulator didn’t buy the trader’s excuse that the mutual funds weren’t harmed.The SEC said that Robert Burns, a former equity trader at FMR Co., violated the Investment Company Act of 1940 by accepting the compensation from brokerage firms. Burns had to disgorge about $141,000 and interest of $67,205. He must also pay a civil penalty of $40,000. FMR is a subsidiary of Fidelity Management and Research Company that manages the Fidelity Investments group of mutual funds.Burns, who was dismissed by FMR in December 2004, sent orders to more than fifty brokerage firms. Of those fifty about ten gave him thirty nine gifts such as wine, travel and tickets to concerts, sporting events and theater productions. The gifts, according to the SEC included tickets to the Wimbledon tennis finals in 2002, 2003 and 2004; a case of 1993 Château Pétrus Pomerol wine in December 2003; tickets to see Prince, the Rolling Stones, Bruce Springsteen, Madonna, and several other performers in concert; tickets to games involving the Boston Celtics, Boston Red Sox and New England Patriots and tickets to theater events including "The Lion King," "The Producers," "Avenue Q," and "Hairspray."Burns did not dispute that he received the gifts but insisted that they did not influence his decisions. He argued that the SEC failed to prove that any fund was harmed by paying a higher commission rate than otherwise available so he did not violate the Investment Company Act.However, the SEC countered that Burns had to prove that he did not violate his fiduciary duty. And even if he could do so, he would have to prove the gifts were unrelated to his role as an equity trader.“The record shows and Burns does not contest, that he accepted numerous gifts from multiple brokers to whom he directed and continued to direct securities transactions on behalf of mutual funds to which he, affiliated with the funds’ adviser, owed a fiduciary duty,” wrote the SEC in its ruling on August 5. “We therefore conclude that the division has made a prima facie showing that, in accepting these gifts, Burns’ interest conflicted with that of the investment companies he was advising.”The case involving Burns is the tip of the iceberg in charges filed by the SEC against Fidelity and several of its senior-ranking traders, over the alleged acceptance of bribes in exchange for steering business to select brokerages.Vincent Loporchio, a spokesman for Fidelity in Boston, said that his firm has taken steps to enhance its policies and procedures concerning conflicts of interest."We adopted additional written standards of conduct related to business entertainment and acceptance of gifts; expanded the role of our ethics office responsible for regulatory compliance and established a new level of management oversight for our trading department," he said.

Bowing to concerns about the costs of compliance, the Securities and Exchange Commission is trying to figure out just how much broker-dealers, transfer agents and banks must spend to track down owners of unclaimed securities accounts before it issues a new rule.

One of the challenges that we have as professionals is motivating our clients to do their estate planning. Our new television special titled "Trial & Heirs: Protect Your Family Fortune!" debuts tonight and we think it will help motivate your clients to take the necessary estate planning steps that many have put off for far too long.

BlackRock has added 10 index funds to its retirement platform, nine of them the target-date BlackRock LifePath Index Portfolios and the 10ths the All Country World Index ex-U.S. Fund. The new LifePath Index Portfolios extend the investment horizon out by 44 years, with the funds having target dates of 2020, 2025, 2030, 2035, 2040, 2045, 2050 and 2055.

Even before the events surrounding the U.S. debt ceiling deal and downgrade, affluent investors’ concerns about how long their retirement assets will last was rising, according to a new Bank of America Merrill Lynch survey conducted in June.

Securian Retirement has added 12 investment choices to its retirement platform, including funds from AllianceBernstein, Nuveen, Manning & Napier and Pax World. With these additions, the platform how offers an array of 120 investments for participants and plan sponsors.

Rather than focus on the traditional notion of saving for retirement, asset management firms serving affluent investors with a minimum of $100,000 to invest and who are between the ages of 40 and 60 should understand that most of these people never intend to leave the workforce, according to Hearts & Wallets.