Check out this awesome tshirt from Carl Richards over at BehaviorGap.com.
Anti-Fraud Measures Your Practice Needs
A story from New York Times personal finance columnist Ron Lieber quickly traveled through the Twitter universe and landed in my inbox. Lieber is a client of NAPFA-member AFW Wealth Advisors and was informed by the firm that one of their advisers, Matthew Weitzman, is under investigation for “certain irregularities in a limited number of client accounts.”
Also, see coverage from Roger at The Passionate Planner and Andrew Gluck at Advisor Blog Central.
Let’s face it. Your clients may very likely see this article. Once they do, they’re going to ask you what you are doing to protect their accounts from this kind of fraud.
How Advisers Can Steal Funds
Client Login and Custody Issues Covered by Financial Advisor Magazine
The webinar I participated in last week about custody issues when retaining client login credentials has really generated a lot of media coverage. Yesterday an article was featured in Advisor Perspectives.
Today, Financial Advisor Magazine posted Access To Client Encrypted Log-Ons Presents Quandary on its online content. Please read it when you have a moment.
I have also answered many questions from advisers on best practices for updating disclosure documents, protecting credentials saved on internal systems, and using aggregation applications, such as ByAllAccounts. If you need assistance with any of these issues, feel free to post comments here or email me privately at bill [at] fppad [dot] com.
The Custody Conundrum at Advisor Perspectives
Yes, posts to FPPad have been sporadic of late, but trust me, work is going on behind the scenes.
In particular, I’ve been working with several individuals on communicating the risks and responsibilities when it comes to using client login credentials (e.g. login and password) to access captive or held-away accounts. As client services continue to expand, advisers are aggregating information on held-away accounts to generate reports that include all of a client’s assets, not just those that are held with the adviser’s custodian of choice.
Last week, I participated on a webinar hosted by ByAllAccounts that addressed the issues of custody when adopting this practice.
Today, Advisor Perspectives has published my article titled The Custody Conundrum. I trust that you will find most of the answers to your questions when it comes to custody and the practice of retaining and using your clients’ account logins.
Kevin Keller Defends the Integrity of the CFP® Mark
Interesting developments have occurred over at Financial Advisor magazine’s online extras this week. First, on April 6, Dr. Somnath Basu wrote an article titled Restoring Trust in the CFP Mark. I encourage you to read it.
While Dr. Basu is correct that the industry needs to do better in its service to clients, he lumps CFP® practitioners together with all financial service professionals, whether they be regulated or not.
So in response, CFP Board CEO Kevin Keller published a response to Dr. Basu titled In Defense of the CFP Mark. Keller clarifies several of Dr. Basu’s misconceptions in his original article and stresses how all advisers must operate with “full accountability and transparency” to clients.
Take a few mintues to read these articles and post comments on FA Magazine’s website.
Update: Now read this post by Dr. David Edward Marcinko at the Medical Executive Post. Dr. Marcinko finishes his comments with this:
And so, why do I shake my fist at Somnath Basu? It’s admittedly with congratulations, and a bit of schadenfreude, because he wrote an article more eloquently than I ever could, and will likely receive much more publicity [good or slings-arrows] for doing so. You know, it’s very true that one is never a prophet in his own tribe. Oh well, Mazel Tov anyway for stating the obvious, Somnath. The financial services industry – and more specifically – the CFP® emperor have no clothes! Duh!
Webinar to Discuss Risks of Custody and Client Credentials
An increasing number of advisers have asked me about using client login credentials to obtain price, transaction, and balance information for assets held in captive accounts (e.g. a client’s active 401(k) plan that cannot be rolled over until termination from service).
As a benefit to clients, advisers are using client credentials to log in to captive accounts to copy the asset information into portfolio management software (such as PortfolioCenter, Advent, or dbCAMS).
This allows the adviser to generate a consolidated report for the client featuring all of his/her assets. In addition, advisers can include the captive account assets in fee calculations if management of those assets is included in the asset advisory agreement with the client.
