Archive for category Headlines

IRS Threatens To Withhold Passports From Those Who Owe

Forbes article by Robert W. Wood

passportThe IRS and Justice Department cooperate to catch tax scofflaws. They can even have notorious ones arrested when they land on U.S. soil. But some in Congress think we could do more to grab people on the move or to prevent them from taking flight in the first place. In 2012, the Government Accountability Office reported on the potential for using the issuance of passports to collect taxes. The idea–introduced several times over the last few years–is a little like requiring you to pay all your outstanding parking tickets to register a vehicle or renew your driver’s license.

The analog here is to restrict passports and travel until you pay the IRS. Several successive proposals have been defeated for now. Some say the right to travel is fundamental, practically constitutional. Moreover, as proposed, this would only apply to serious tax matters. The movement started in 2012, when Sen. Harry Reid (D-Nev.) proposed that if you owe the IRS more than $50,000, you shouldn’t get a passport. See also Sen. Orrin Hatch’s Memo to Reporters and Editors.

These efforts morphed into Senate Bill 1813, introduced by Senator Barbara Boxer (D-CA). Mostly it was about highway safety, but would also authorize the federal government to prevent Americans from leaving the country if they owe back taxes. One idea is to allow the State Department to revoke, deny or limit passports for anyone the IRS certifies as having a seriously delinquent tax debt in an amount in excess of $50,000.

Note that the no-travel, no-passport idea hasn’t become law, at least not yet. But in 2014, Sen. Ron Wyden (D-Ore.) joined the chorus. As proposed, you would still be able to travel if your tax debt is being paid in a timely manner, in an emergency, or for humanitarian reasons. Still, critics noted that it isn’t limited to criminal tax cases or even situations where the government fears you are fleeing a tax debt. In fact, if the bill is passed you could have your passport revoked merely because you owe more than $50,000 and the IRS has filed a notice of lien.

A $50,000 tax debt is easy to amass today. In addition, tax liens are pretty standard. The IRS files tax liens routinely when you owe taxes. It’s the IRS way of putting creditors on notice so the IRS eventually gets paid. In that sense, the you-can’t-travel idea seems extreme. Some commentators noted that a far smaller sum of unpaid child support can trigger similar passport action. Others attack the proposal as potentially unconstitutional.

Some people figure the IRS needs all the help it can get to collect taxes. Others fear administrative glitches and potential administrative nightmares. The proposed law appears in the pending Highway Bill, more prophetically labeled the “Moving Ahead for Progress in the 21st Century Act” or “MAP-21”. It would add a new section 7345 to the code entitled “Revocation or Denial of Passport in Case of Certain Tax Delinquencies”.

Bear in mind that tax liens are almost automatic. IRS tax liens cover all your property, even acquired after the lien is filed. The courts use liens to establish priority in bankruptcy proceedings and real estate sales. The IRS can file a Notice of Federal Tax Lien after:

  • IRS assesses the liability;
  • IRS sends a Notice and Demand for Payment saying how much you owe; and
  • You fail to fully pay within 10 days.

A tax lien can be a mistake. In most cases, there’s no mistake and the IRS lien is valid. But occasionally the person might not actually owe the taxes and may just need to straighten out a pile of paperwork.


Posted by:  The Trust Advisor



, , ,

No Comments

Jammin’ Java Owners Charged With Stock Manipulation

CFO article by Matthew Heller

jamminjavaThe former CEO of Jammin’ Java and eight other individuals have been charged over a “pump-and-dump” scheme that allegedly generated $78 million in illicit profits by manipulating the stock price of the distributor of Marley Coffee.

Jammin’ Java is licensed to use the trademarks of the late reggae star Bob Marley and was founded by one of his sons, Rohan Marley. According to the U.S. Securities and Exchange Commission, former CEO Shane Whittle orchestrated a complex scheme to dump Jammin’ Java shares on “the unsuspecting public” after the stock was hyped in fraudulent promotional campaigns.

The fraud involved using offshore intermediaries to funnel shares to the public, a sham financing agreement, and phony online newsletters, the SEC said in a civil complaint filed Tuesday.

Wayne Weaver of the U.K. and Canada, Michael Sun of India, and René Berlinger of Switzerland are accused of controlling the offshore entities, while British twin brothers Alexander Hunter and Thomas Hunter are charged with hyping the stock in the newsletters.

“The defendants made millions of dollars in illicit profits at the expense of the investing public and attempted to conceal their misconduct through complex offshore networks that were revealed in our investigation,” David Glockner, director of the SEC’s Chicago regional office, said in a news release.

According to the complaint, Whittle, a stock promoter, befriended Rohan Marley in 2005 and, after learning Marley had purchased a small Jamaican coffee farm, proposed they create a large-scale coffee distribution business built on the Marley name.

In 2008, the SEC said, Whittle executed a reverse merger between a shell company and Marley Coffee that he used to secretly gain control of millions of shares previously issued to foreign nominees. Marley Coffee was renamed Jammin’ Java in 2009.

The alleged pump-and-dump scheme culminated in mid-2011 after Jammin’ Java issued press releases announcing, among other things, that it was selling its coffee on a major website. Jammin’ Java stock rose from $0.17 per share in December 2010 to an intraday high of $6.35 on May 12, 2011, the peak of the promotion.

Three other defendants — U.K. citizens Stephen Wheatley, Kevin Miller, and Oman resident Mohammed Al-Barwani — are accused of being part of the network of offshore intermediaries.


Posted by:  The Trust Advisor


, , , ,

No Comments

Conversation For The Thanksgiving Table – Investing For Teenagers

Huffington Post article by Carrie Schwab-Pomerantz, CFP

teenagersDear Carrie,

My 15-year-old grandson called me the other night and asked if he should open a brokerage account. He has $500 to invest. What should I tell him? Thanks!

–A Reader

Dear Reader,

I must say I’m impressed! For a teen to want to invest his savings rather than buy the latest tech toy is quite a positive statement. Someone must be doing something right!

I’m all for young people starting to invest early for several reasons. First, it’s a great way for them to learn about the mechanics of investing. Second, they can learn about the markets — during both good times and bad — without too much at stake. And finally (and perhaps most importantly), it gives an adult an excellent opportunity to connect to a teen in a substantive way, sharing thoughts about current events as well as the future.

But before you get started, it’s important to set the stage. Your grandson obviously has experience saving his money. Now you can talk about how investing is different. Explain that while saving is safe, it doesn’t allow for much growth. Investing, on the other hand, involves risk and requires careful management, but is a better way to build long-term wealth.

If your grandson understands this difference and still wants to invest, I’d say go for it.

Open a custodial account

Because your grandson is a minor, he’ll need an adult (most likely either you or a parent) to open the account and act as its custodian until he reaches the age of majority (typically 18 or 21 — or up to 25, depending on his state). There are two options: a custodial brokerage account or, if your grandson has earned income, a custodial Roth IRA. At his age, a brokerage account is the most likely choice.

One caveat with a custodial brokerage account, though: if large amounts of money are involved, there can be tax issues as well as a possible impact on college financial aid. But for small amounts, it provides a fantastic way for young people to get their first exposure to investing. And you can open a custodial account for as little as $100.

Introduce the basics of investing

Once the money is in the account, it’s time to invest. Your first step should be to explain some fundamentals:

  • Goal setting — Explain the importance of establishing goals, both short- and long-term. Money for a short-term goal, like a car or a trip — or any money he’ll need in three to five years — shouldn’t be invested in the stock market. He can take on more risk for longer-term goals because he’ll have more time to ride out market declines. Kids often aren’t programmed to think this way, so it could lead to some interesting discussions!
  • Diversification — Discuss the critical need to diversify by holding different types of investments — the “don’t put all your eggs in one basket” concept. This will become more important as his assets grow.
  • Asset allocation — Talk to him about dividing his money among stocks, bonds, and cash in a way that is appropriate for him now — and how that might change in the future.
  • Risk/reward — Be sure he understands that the highest potential for gain usually involves a higher level of risk. Have him think about how much risk he’s comfortable with.

Explore investments that pique his interest

When your grandson is ready to make his first investment, there are a couple of ways to go. One approach would be to buy a mutual fund or ETF so he’d get instant diversification in a single investment.

However, he might find it more engaging to buy a few shares of companies that he’s familiar with or has an interest in — for example, a technology, entertainment or sports company. Even though $500 isn’t enough to build a truly diversified portfolio, and transaction costs may eat into his capital, owning stocks he can identify with could make investing more interesting.

Encourage ongoing involvement

Once you get your grandson going, help him follow his investments and the markets. Show him how easy it is to check his portfolio online. As you know, there’s an entire universe of information online about investing and managing money. Offer to be a resource if he has specific questions.

Hopefully, the more he learns, the more your grandson will be inspired to save and invest. And as we approach Thanksgiving and the start of the holiday season, you might give him an extra motivation by offering to match a percentage of any new contributions to his account as a gift. It would be an added bond between you — and something you could each be truly thankful for this year and for many years to come.

One final word: studies have shown that many parents are more likely to discuss investing with their sons than daughters. So to you parents and grandparents of girls, include them in the lessons as well!


Posted by:  The Trust Advisor


, , ,

No Comments

10 Ways to Save Money on Taxes before Year-End

With 2015 coming to a close, you still have time to take steps that can lower your 2015 taxes. It is advised that you review you tax situation with your tax advisor. Financial advisors can also help many clients especially with year-end investment planning.

tax_planning_1. Postpone Income
If you think you will be in a lower tax bracket next year, consider deferring some of your income to 2016 to keep tax bills lower in 2015.

Some examples: As a self-employed person, you can simply bill your clients a little later than usual, ensuring that payments aren’t received until January. If you are in line for a bonus, see if your employer will hold off writing the check until January.

Remember income is taxed in the year it is received and taxpayers cannot simply defer taxes by not depositing checks received in the bank.

2. Pay Deductible Expenses Before December 31
Just as you may want to defer income into next year, you may want to lower your tax bill by accelerating deductible expenses this year (you can only deduct expenses that reach a particular percentage of your income). Don’t employ this strategy if you expect to be in a higher tax bracket in 2016 – in that case, the deductions will be more valuable to you next year.

Some examples: You can make your January mortgage payment in December, which will give you extra interest to deduct. You can prepay your property taxes or send in estimated state and local taxes that you would otherwise pay in January. Pay next year’s professional dues and subscriptions to trade publications. Pay your state income tax estimate before December 31 accelerates their federal deduction. Opt to have dental work or elective (deductible) surgery before the end of the year.

Remember using a credit card is the same as using cash—the deduction is taken in the year the charge is incurred, not the year the credit card balance is paid off.

3. Fund Retirement
Investing in your own retirement is a good way to reduce your taxable income.

Contribute to your retirement accounts by December 31 to count for 2015. You have until April 18, 2016, to set up a new IRA or add money to an existing IRA and still have it count for 2015. Beginning in 2015, you may roll over only one IRA account per 12-month period.

Many employers match worker contributions up to a certain figure. Try to increase your 401(k) contribution so that you are putting in the maximum amount of money allowed. If you can’t afford that much, try to contribute at least the amount that will be matched by employer contributions.

With a tax-deferred plan like an IRA, once you hit age 70 1/2 you must take out some money every year. Failure to take a required withdrawal can result in a penalty of 50% of the amount of the Required Minimum Distribution (RMD) not withdrawn. You can also donate your RMD directly to charity and avoid paying income taxes on the withdrawal.

4. Charitable Giving
Charitable contributions, along with other deductions, should be timed so as to occur in a year in which you will be in a higher marginal tax bracket. Only contributions actually made prior to yearend are deductible.

If you donate mutual funds or stocks that have unrealized gains, then consider a charitable donation of shares instead of cash. Doing so allows you to deduct the donated shares’ market value, and neither you nor the charity will have to report the gains.

If you want a charitable deduction this year but haven’t chosen your charities yet, consider contributing to a donor-advised fund by the end of the year.

Remember you must itemize your deductions to get a write-off, and the organization must be a qualified charity. Get your check in the mail by December 31 or consider using a credit card. Make sure you have a receipt, which can be a cancelled check or your credit-card statement.

5. Harvest Your Losses
A key year-end strategy is called “loss harvesting.” This involves selling investments such as stocks and mutual funds to realize losses. You can then use those losses to offset any taxable gains you have realized during the year. Losses offset gains dollar for dollar.

Those who suffered more losses than gains may be able to reduce their taxable incomes by up to $3,000, with additional losses carrying over to future years. You can carry over losses year after year for as long as you live.

Remember to avoid a “wash sale” – wait at least 31 days after the sale to buy the same security.

If you own any securities that are all but worthless with little hope of recovery, you might consider selling them before the end of the year so you can capitalize on the loss in 2015. You can deduct a loss on worthless securities only if you can prove the investment is completely worthless.

6. Part with Investment Gainers
If you would rather pay capital gains tax in 2016, then wait until January to sell winning stocks, bonds, or mutual funds. However, if you donate these gainers directly to a charity in 2015, you can enjoy two tax breaks. You won’t owe any taxes on your capital gains. And you can deduct the full market value of the investment on your 2015 return.

7. Check Your Flexible Spending Accounts
If you have a flexible spending account (FSA) for health care expenses, and you haven’t used all the money in it you will need to use the bulk of it before the end of the year.

Check to see if your employer has adopted a grace period permitted by the IRS, allowing employees to spend 2015 set-aside money in early 2016. If not, you can do what employees have always done and make a last-minute trip to the drug store, dentist or optometrist to use up the funds in your account.

8. Funding 529 College Savings Plans
Most states, offer residents some kind of income-tax deduction for contributions to their 529 plan as long as you fund the account by December 31. However, you cannot deduct these contributions on your federal return. Consider funding 529 plans to apply 2015 annual gift tax exclusion treatment to the contributions. It may be possible to contribute up to $70,000 upfront. This pre-funding is often described as superfunding. Look up your state’s rules at

9. Gift Tax Exclusion
Transferring wealth (cash, securities or other property) directly to friends or relatives doesn’t save income tax but does allow you to take advantage of the gift tax exclusion. The IRS permits filers to give $14,000 (or $28,000 for a married couple) to another person each year without reducing the payer’s unified credit. Such a gift could remove the value of the gifted asset, plus future appreciation, from your estate.

10. Beware of the Alternative Minimum Tax
Review your circumstances with your tax advisor to see if you may be exposed by AMT in 2015.
Sometimes accelerating tax deductions can cost you money. This is a year-end issue because certain expenses that are deductible under the regular rules are not deductible under the AMT. There’s a good chance you will be hit with AMT if you deduct a significant amount of state and local taxes, claim multiple dependents, exercised incentive stock options, or recognized a large capital gain this year.

Consult with Your Tax Pro
As always, year-end tax planning must take into account each taxpayer’s particular situation and goals. Consult with your tax professional before year end to devise a tax-saving plan that most effectively meets your needs and factors in the latest tax rules.

, ,

No Comments

Where Do Your Debts Go When You Pass Away?

Quicken Loans article by Patrick Chism

debtLet’s start by acknowledging that death’s no fun to talk about. It’s easier to kick that rusty can down the road, saving those darker conversations for another day. But before you take the “financial ignorance is bliss” approach, you need to consider how your debt will affect your loved ones after you’re gone. In an ideal world, you wouldn’t have any debt to pass on to your family. But whether it’s caused by circumstances or life choices, some of us will inevitably be in the red even when we’re dead. Let’s take a deeper look at what happens to your debt when you’re gone.

Where There’s a Will

While we’re contemplating mortality, make sure you’ve taken some time to create a living will. Not only is it cheaper than ever before ($20–$50), but it allows you to better protect your estate and divvy it up as you see fit. Without a will, your assets will be handed over to the state and then given to your next of kin. If you want any say in where your estate is headed, make sure you sit down and make a will.

What Happens to My Debt When I Die?

After you’ve taken your final bow, your estate generally owes any of your debts. If you have enough assets to pay for these debts, someone known as an executor (such a cheery title) is responsible for selling those assets and settling up with the creditors. If your estate doesn’t have the funds to pay for these personal debts (this is called a solvent estate), then the debts typically die with you. But not always.

In the event that your estate does cover the amount of your debts, the rest of your estate is then given to your heirs. But remember, creditors will come before your heirs.

Undead Debts

The largest exception to the dying debts is when one of your loved ones acts as a guarantor or co-signs one of your loans. By doing this, they’re saying they will assume the loan if you can’t. And, to be frank, you can’t do much assuming when you’re dead.

This is also the case for spouses that have joint credit card accounts. Even if your spouse had nothing to do with that boat you purchased on a credit card, they’re still responsible for paying it off. This is not suggesting that you and your spouse should absolutely have separate accounts for your debts and assets. In fact, if managed well, that can be a powerful booster to your finances. But before you tie the financial knot with anyone, make sure you can trust their spending habits.

It’s important to note that an authorized user on a card is not the same thing as a co-signer. An authorized user will not be required to pay the debts of the deceased account holder.

Dying to Get Rid of Student Loans

It’s surprisingly difficult to have your student loans discharged. You can’t even get rid of them by filing for bankruptcy (in most cases). In life they’re attached to you like a bad tattoo. Death, however, is an excellent cure for most federal student loans.

Private banks aren’t nearly as forgiving of student loans. Private student loans can eat away at your estate if you haven’t planned a way to protect yourself (we’ll talk more about this in just a bit). Since 2009, though, many private student loan lenders have become better about wiping the slate clean after death, but each lender is different.

The Mortgage

According to federal law, a surviving spouse – with proof of financial ability and creditworthiness – will be able to take over the mortgage if you die, rather than paying the full balance back to the mortgage company. Once again, talking to your family is an important part in this process. You need to communicate the realities of the situation, specifically those that involve finances. In some cases, it may make sense for your spouse to downsize to a cheaper house so that they can have a more manageable monthly payment.

Protecting Your Estate from Debt

While there are always exceptions at the state level, in most cases, 401(k)s, life insurance policies, IRAs and brokerage accounts are protected from creditors. This allows you to list individuals as your beneficiaries, and it keeps the money from going to your estate. Remember, in an estate, creditors come before heirs.

The Exceptions: Community Property Laws

Some states have something called community property laws, which could definitely affect the way your debt is treated after you’re gone. These laws require that any debts or assets that you’ve obtained after you got married are also the responsibility of your spouse. In other words, even if your spouse isn’t on the car loan, he or she is still responsible for paying it off when you’re gone.

Below are 10 states in the U.S. that have community property laws: Arizona, California, Idaho Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. Alaska makes the list too, but residents have the option to make their property considered community property or not.

You Can’t Take It with You

Debt can certainly be a headache during life, but under certain circumstances, it can be a tragedy after death. If you’re not careful, your family could suffer the consequences. Discussing death isn’t easy, but do yourself and your loved ones a favor by sitting down and talking about these financial decisions. And if you have any questions at all, don’t hesitate to speak with a lawyer.


Posted by:  The Trust Advisor



1 Comment

Fidelity Boots Betterment… And Joins Growing List of Robo-Advisers

NY Times article by Ron Lieber 

fidelityFidelity Investments is flirting with the investment robots.

Fidelity is testing its own automated investing platform, which it is calling Fidelity Go. The move puts the company into head-to-head competition with so-called robo-adviser start-ups like Betterment and Wealthfront, as well as traditional players like Vanguard and Schwab that recently began offering similar services.

The Fidelity details are listed in a Securities and Exchange Commission filing, and a company phone representative confirmed the existence of the new service, as did a Fidelity spokesman.

At the moment, Fidelity Go is available to only a few hundred of the company’s employees, though Fidelity plans to invite some customers to test it early next year and then do a public introduction after that.

Like the competing products, the company will ask customers to fill out online questionnaires about their investment goals and risk tolerance. Then, it will suggest a low-cost portfolio of investments. Fidelity’s filing said the program would be free for now, though it eventually expected to charge a fee. The phone representative said it would cost 0.1 percent to 0.2 percent annually, not including the costs of the mutual or exchange-traded funds in the portfolio. Robert Beauregard, a Fidelity spokesman, said the company was still deciding what fees to charge.

Investment costs are where the rubber often meets the road in investing success, and Fidelity, in its filing, promised that the portfolio costs would be “lower than average.” While a “significant” portion of the portfolios, which will invest in stocks, bonds and presumably safer short-term investments, will be in investments that track market indexes, some money will go into Fidelity’s own actively managed mutual funds. That provides an advantage to customers only when those mutual funds outperform the index fund in its market segment over time. Most actively managed funds don’t accomplish that. Mr. Beauregard said that Fidelity would refund a majority of fees it earned from its own funds to Fidelity Go customers who invested in them.

These services have proved attractive to investors who say they believe that trying to beat the market is foolish and do not want the hassle of finding the best index funds and remembering to buy and sell them at the right times to make sure their portfolios are not getting too risky or too safe.

Over the last several years, Betterment and Wealthfront have each gathered about $3 billion in assets. Schwab’s Intelligent Portfolios offering, which it introduced in March, had collected $4.1 billion as of Sept. 30.

Vanguard reports $26 billion in its service, $16 billion of which it says is new to the firm, with the rest coming from existing accounts. It offers financial planning with people, in addition to automated investment management, for its 0.3 percent annual fee.


Posted by:  The Trust Advisor


, , , ,

No Comments

Allen & Co. – The Advisory Firm To The Biggest Names

Business Insider article by Lucinda Shen

Lavish_carsSome of the biggest names in tech, telecom, and the media industries have one thing in common.

The tiny financial advisory firm quietly advising them on deals behind the scenes: Allen & Co.

The firm worked on the initial public offering of Ferrari, which priced on Tuesday night.

It is also an adviser on the flotation of Match Group, which is behind some of the world’s biggest dating apps and websites.

Those are just the latest in a long line of landmark roles for the firm. It has previously worked on deals for the likes of Facebook and Google.

The firm shuns the spotlight. It has no website (this one belongs to a different company), and employs fewer than 200 people. A spokesperson for the firm did not respond to a call seeking comment in time for publication.

Herbert Allen Jr. led the company for years, and has a seat on the board of Coca-Cola. His son Herb Allen III, who is now CEO at the firm, was named on Vanity Fair’s new establishment list in 2012.

Many of the deals the company works on are birthed during the firm’s secretive annual Sun Valley Conference, which is sometimes described as the “Billionaire’s Summer Camp.”Hollywood celebrities mingle with CEOs like Bill Gates and Elon Musk.

Here is a list the firm’s best-known clients.


Sector: Auto

About: The IPO of luxury carmaker Ferrari is one of the most hyped deals of 2015.

The Italian supercar maker priced its initial public offering on Tuesday at $52 per share, with shares trading up at the open.

Allen & Co. was a bookrunner 0n the deal.

Time Warner Cable

Sector: Telecom

About: Allen & Co. advised Time Warner Cable on its $80 billion merger with Charter Communications, which was announced in May 2015. The deal will make the combined entity the second-largest cable provider in the US.


Sector: Technology

About: Allen & Co. advised on the separation of PayPal and eBay in July 2015, in a deal worth $49.16 billion.


Sector: Technology

About: Allen & Co. landed a role on Facebook’s giant IPO in 2012, in a deal which raised $16 billion on the Nasdaq.

The firm later worked on Facebook’s acquisition of popular instant-messaging platform WhatsApp for $21.94 billion in 2014.

The app now boasts 900 million active monthly users, while Facebook’s in-house app, Messenger, claims 600 million monthly users.


Sector: Technology

About: Allen & Co. acted as an underwriter on Twitter’s IPO, which raised $2.1 billion in November 2013.


Sector: Technology

About: Allen & Co. was one of advisers on Google’s IPO in 2004. The sale priced at $85 a share and raised $1.67 billion — coming in below expectations at the time.


Sector: Technology

About: LinkedIn raised $352.8 million in a 2011 initial public offering, with Allen & Co. working on the deal.

Coca-Cola Co.

Sector: Food & Beverage

About: Allen & Co. advised Coca-Cola Co. on its $13.6 billion acquisition of bottling company Coca-Cola Enterprises Inc. in February 2010.


Sector: Telecom

About: Allen & Co. advised Activision, a game-development company, on its $12.4 billion merger with Vivendi in 2007.

In 2013, Activision bought about $8.2 billion worth of shares from Vivendi, with Allen & Co. again advising on the transaction.

Sector: Online Retail

About: is a Chinese ecommerce website founded by CEO Liu Qiangdong.

In May 2014, Allen & Co. acted as one of the joint bookrunners on its IPO on the NASDAQ, which raised $2.05 billion. At the time, it was the biggest Chinese IPO ever.


Sector: Online Retail

About: Allen & Co. acted as a joint bookrunner for the company in 2011, for a deal that raised $805 million on the Nasdaq.

Most recently, the company cut 10% of its workforce.


Sector: Technology

About: Workday is a cloud-based-software company that creates payroll- and financial- management platforms for large companies. It went public in 2012, raising $733 million with the help of Allen & Co. as a bookrunner.

Allen & Co. again jumped in in 2014 to help the company through its follow-on offering, which raised $614 million deal.

Pure Storage Inc.

Sector: Technology

About: A flash-storage provider, Pure Storage was one of the most watched IPOs of 2015 — but closed below its $17 per share IPO price.

Allen & Co. was a bookrunner on the offering.


Posted by:  The Trust Advisor


, , ,

No Comments

FTJ FundChoice Hits Critical Mass on Retention, Steady Advisor Adoption

Once advisors migrate to the outsourced investment approach, they almost never go back. Meteoric growth at FTJ FundChoice boils down to nourishing that inherent 90% retention rate while courting firms ready to make the leap.

tamp_turnkey_asset_managementSuccess continues for FTJ FundChoice as the firm recently announced that it now invests over $5 billion on behalf of its financial advisor clients. FTJ FundChoice, a national turnkey asset management program (TAMP) headquartered in Cincinnati, OH, credits its record growth to an enhanced customer service model, the launch of its investment management and reporting technology platform Market Movement Strategies, and the success of its Three Mandate Investment Process.

Since October 2012, FTJ FundChoice’s assets under administration (AUA) have grown 81.9%, increasing from $2.8B to $5B. Also, FTJ FundChoice’s retention rate has increased each year to 90.4%.

“We are proud to say that more advisors join our platform daily, and once they join, they stay,” said Dean Cook, President of FTJ FundChoice.

“We’ve worked tirelessly to hone in on the needs of today’s financial advisor and fine tune our advisor experience. We enhanced our technology offering to help our advisors compete in a changing marketplace, and reworked our customer service model to where each FTJ FundChoice client has a consistent and dedicated support team. We are thrilled to announce this record growth as it is not only a testament to the hard work of our FTJ FundChoice team but also the direct result of our clients’ success.”

Founded in 2001, FTJ FundChoice provides financial advisors the ability to manage diversified mutual fund and ETF portfolios for their clients through access to leading investment managers in their Strategist Program. This year, the FTJ FundChoice Strategist Program welcomed Loring Ward, Vanguard, AQR Capital, Blackrock, Blackstone, First Pacific Advisors, Ocean Park, Meeder, and William Blair. FTJ FundChoice has also forged a relationship with Rocaton Advisors for oversight of their platform.

“We are dedicated to creating industry-leading products and services for financial advisors that provide them with the freedom and flexibility to focus their time on what is most important to them,” adds Cook. “By adding more top strategists to our Strategist Program, we are giving advisors and their clients the ability to choose strategist partners from the best of the best. We look forward to expanding on our proposition and evolving our service-based ethos of being good stewards for the thousands of advisors who rely on us each day.”

, , , ,

No Comments

Betterment, the “Robo-Adviser”, Tops $3B in AUM

NY Post article by Kevin Dugan

robo graphicThere’s a new top robot in town.

Betterment, a seven-year old “robo-adviser” wealth manager, surpassed rival Wealthfront this week after surpassing $3 billion in assets under management — nearly tripling client funds since January, CEO Jon Stein told The Post.

The milestone comes seven months after an online spat erupted among Betterment, Wealthfront, and Charles Schwab, which had started its own automatic investing platform.

At that time, each company was amping up its marketing battle plan and publicly dissed their rivals’ fee structure in an attempt to woo new customers.

“When Schwab entered the space there were a lot in the industry saying, ‘Oh this is going to be trouble for Betterment,” Stein said. “In fact, what we saw was that we started growing faster.”

Schwab, which has almost $2.5 trillion in total assets, has more than $4 billion invested in its robo-platform, spokeswoman Alison Wertheim told The Post.

Robo-advisers are online-centered investing platforms that rely on automatic investing strategies rather than flesh-and-blood wealth managers.

While Betterment has a tiny amount of assets under management compared to traditional wealth managers, it recently has gotten approval from Goldman Sachs so that its employees can use the platform alongside Fidelity for investing.

Betterment also is in talks with JPMorgan Chase for the same approval, Stein said.

Kate Wauck, a Wealthfront spokeswoman, declined to provide a precise figure of the company’s assets, and instead referred to the Web site that boasts of “nearly $3 billion of [clients’] assets.”


Posted by:  The Trust Advisor


, , , ,

No Comments

FINRA Seeks to Better Connect Firms With Their BrokerCheck Ratings

New York Law Journal article by Evan Charkes

U.S._Securities_and_Exchange_Commission_headquartersOver the past several years, the Financial Industry Regulatory Authority, Inc. (FINRA) has sought to deepen retail investors’ awareness of its BrokerCheck public disclosure system by issuing a series of rule proposals that would link this system to its member firms’ websites and other of their social media presence pages.1 BrokerCheck allows a retail investor to access information such as education, licenses and disciplinary history about a registered representative or broker-dealer before choosing to do business with that person or firm.

Recently, the Securities and Exchange Commission (SEC) approved FINRA’s proposal to amend Rule 2210 to require each member firm’s website to include a readily apparent reference and hyperlink to BrokerCheck on its initial webpage or any other webpage that contains a professional profile of a registered representative who conducts securities business with retail investors.2

This rule was generally supported by both the securities industry and investor advocacy groups, although each did not achieve all that it sought in their respective comment letters to the proposal. This article will summarize the background to the rule and specific practical aspects addressed by FINRA during the rulemaking process.

Early Stages

By regulatory notice FINRA initially proposed changes to BrokerCheck in 2012 to address recommendations made by the SEC in its 2011 study of investment advisers and broker-dealers. Section 919B of the Dodd-Frank Wall Street Reform and Consumer Protection Act mandated that the SEC conduct this study.3

In January 2013, FINRA formally filed with the SEC its first proposed rule that would have required member firms to include a prominent description of, and link to, BrokerCheck on their websites, social media pages and any comparable Internet presence.4 This rule filing would have required firms to use a “deep link” to the BrokerCheck summary reports specific to each firm and their registered representative.

This “deep link” requirement caused significant concern within the securities industry because of the operational difficulties it would have entailed to link a webpage directly to a specific BrokerCheck entry for a particular registered representative. FINRA withdrew this filing to assess and respond to concerns raised.5

In its next filing, in April 2014, FINRA eliminated the “deep link” requirement. Instead, FINRA proposed a “readily apparent” reference and hyperlink to BrokerCheck on the firm’s website, and any other online retail communication that contained a professional profile or other contact information pages.6 This proposal specifically required a hyperlink to third-party websites. Industry advocates opposed this latter requirement because the member firm did not control such sites and would make it difficult to implement from a compliance perspective.7

The April 2014 proposal also excluded: (i) email and text messages, (ii) retail communications posted on online interactive forums, (iii) member firms that do not provide products or services to retail investors, and (iv) directories or lists of registered persons limited to name and contact information.

June 2015 Rule Filing

More than a year passed before FINRA filed its current proposal to amend Rule 2210.8 In this June 2015 filing, FINRA addressed many of the significant concerns raised in prior comment letters, and in particular, eliminated the requirement to link to third-party websites not controlled by a member firm, including, for example, LinkedIn, Twitter, and Facebook pages and YouTube channels. FINRA also maintained the exceptions to the rule’s requirements from the April 2014 filing.

In its June 2015 rule filing, FINRA made clear that the scope of the rule applied only to a firm’s website, but left the door open to future rulemaking regarding links on third-party websites. One would expect the securities industry to raise the same operational challenges in the future unless the technology dramatically changes. Notably, the approved rule continued the basic paradigm of requiring a “readily apparent” reference and link to BrokerCheck on the initial webpage that the member firm intends to be viewed by retail investors and any other webpage that includes a professional profile of a registered representative.9

FINRA took note of the securities industry’s objections to the “deep link” requirement because it “could potentially increase website maintenance costs” and noted that “most investors should be able to find information concerning particular members or registered representatives without difficulty given the ease of operation of the BrokerCheck search feature.”10 Thus, the “deep link” requirement was not part of the June 2015 amended filing.

Although emails, text messages, and retail communications posted on online interactive forums are clearly outside the scope of the rule, FINRA chose to remove these exceptions from the actual final rule proposal as “unnecessary” since the rule “by its terms applies to a member’s own website” only.11 The June 2015 filing also clarified that links are required only for webpages about profiles of “registered persons,” and not profiles of “associated persons,” and that if a firm’s webpage includes profile information about multiple registered persons, only one link to BrokerCheck is required.12

Guidance for Implementation

During the final stages of the rulemaking process, and prior to the SEC approval, FINRA provided meaningful interpretive guidance that member firms will be able to use during their implementation efforts. In particular, FINRA stated that:

• If a member firm were also part of a larger financial institution, FINRA clarified that a “member’s own website” means whether the website promotes the business of the member firm and is intended to be viewed by retail investors. Thus, if an independent contractor registered representative promoted the business of the member firm on his or her website, then the rule would apply.

• The linking requirement did not apply to an enterprise-level or parent company homepage or other webpage that merely referenced an affiliated broker-dealer.

• A hyperlink is not required for webpages of a branch office of the member firm or branch office personnel unless these were actually separate websites.

• A hyperlink is required if the branch office or branch personnel site contains profile information.

• Microsites—which are individual webpages that function independently from the main website of the broker dealer—are out of scope if they act “solely as a conduit to the member’s main website” which then contains the hyperlink.13

FINRA also addressed several specific practical issues, notably:

• Links are not required on every webpage of a member’s website.

• Firms may use “buffer” screens or interstitial exiting site pages—which are pop-ups on the screen—to inform investors that they are leaving the member’s website prior to connecting to BrokerCheck.

• Firms may use “widgets” (which are applications placed directly on the website) as a way to link to BrokerCheck so long as the link and reference to BrokerCheck are “readily apparent.”14

FINRA made clear that the rule does apply with respect to mobile device applications that provide access to a registered representative’s profile information.15

A critical issue that firms need to address is how to apply the “readily apparent” standard. FINRA does not define this term. Rather, FINRA stated that firms have “flexibility” about where to place the hyperlink to BrokerCheck so long as the firm meets this standard.16 FINRA stated that it expected that the reference itself would be “brief,” and later noted that it would be making available to member firms “optional” BrokerCheck-related icons or similar resources.17 Presumably, these FINRA-created icons will be concise and not create space issues with respect to placement.

FINRA identified three specific and non-exhaustive factors that it would review to determine whether the “readily apparent” standard was being met: (i) placement (i.e., how visible is it on the landing page; if scrolling is required, whether it is clear that information is available below the screen; whether the hyperlink is buried in a long paragraph); (ii) font size (is it the same size as other information on the page); and (iii) font color (does it contrast or blend in with the website’s background).18

Firms also should pay attention to FINRA’s comment that placing the reference and hyperlink to BrokerCheck in a footer would not satisfy the “readily apparent” requirement.19 FINRA did not provide any more “specific guidance” regarding the term “readily apparent.”

With respect to mobile devices, FINRA chose not to mandate a specific placement and gave firms flexibility as to the location of the reference and the link.20 FINRA also rejected the notion of a limited “safe harbor” for firms if the hyperlinks to BrokerCheck became broken as a result of script or programming issues and the firms then took a reasonable time to fix the link. Rather, FINRA stated it would review the circumstances of the failure, but expected firms to “expeditiously” address the problem.21

Finally, with respect to timing of the rule’s effectiveness, FINRA suggested a six-month implementation period in their June 2015 filing, and now that the SEC approved the filing, the remaining step is for FINRA to publish a Regulatory Notice with the final compliance effective date.

Even without the specific effective date, firms would be wise to identify affected websites and webpages that identify professional profiles, and determine how they will comply with the “readily apparent” standard. Decisions based on the FINRA interpretive guidance will also greatly help firms manage their implementation efforts. One would expect that the amended rule will benefit retail investors who will now have easier access to FINRA’s database of information regarding member firms and individual registered representatives.


1. Investors can access BrokerCheck at no charge by visiting or by calling (800) 289-9999. Through BrokerCheck, FINRA releases to the public information reported on uniform registration forms to the Central Registration Depository (CRD). For registered investment advisers, the SEC maintains the Investment Adviser Public Disclosure (IAPD) database.

2. SEC Release No. 34-76106 (Oct. 8, 2015), available at:

3. FINRA Regulatory Notice (RN) 12-10 (February 2012). The study is available at:

4. SEC Release No. 68700 (Jan. 18, 2013), 78 F.R. 5542 (Jan. 25, 2013). This filing was to amend Rule 2267, which requires member firms to provide annually in writing to each of their customers the BrokerCheck hotline number, the FINRA website address, and a notification of the availability of an investor brochure that describes BrokerCheck.

5. See FINRA RN 14-19 at p. 2 (April 2014) for the rule’s background.

6. Id.

7. See SIFMA Letter to Marcia E. Asquith (June 16, 2014).

8. See SEC File No. SR-2015-014 (June 16, 2015) (June 2015 Filing) available at:

9. Id. at pp. 23-24.

10. Id. at p. 24. FINRA noted that a member firm could choose to establish these deep links to an individual’s BrokerCheck page if it so chose. See Letter from Jeanette Wingler, FINRA Assistant General Counsel, to Brent J. Fields, SEC, dated Sept. 21, 2015, at p. 2 (Wingler Letter).

11. Id. at p. 24. FINRA stated that putting the links in emails would be “overly burdensome and require significant system and operational changes, without commensurate benefits.” Wingler Letter at p. 3.

12. June 2015 Filing at p. 25.

13. Wingler Letter at pp. 4-6.

14. June 2015 filing at pp. 25-26.

15. June 2015 Filing at p. 26.

16. Wingler Letter at p. 4.

17. Wingler Letter at p. 6.

18. Wingler Letter at pp. 6-7.

19. Wingler Letter at p. 6.

20. Wingler Letter at p. 7.

21. Wingler Letter at p. 7.


Posted by:  The Trust Advisor


, ,

No Comments