Registered Investment Advisors, Financial Planning, and Oversight
Election 2020 certainty and uncertainty in the markets dominated the SAS newsletter last week. In this SAS newsletter, we describe our CA state audit process as an RIA and more current events.
SAS Investment Management clients with assets managed by SAS Financial Advisors at TD Ameritrade Institutional will notice that the online account access portal www.advisorclient.com has shifted to its newer version and will officially sunset the older version on October 29th, 2020.
- Many of you (80% of all users site wide, as TD reports) have likely been using the newer version already.
- For those of you who haven’t, the experience remains as intuitive and accessible as before including access to view your accounts, update your contact information like phone numbers and addresses, and more.
- The upgraded AdvisorClient® is built on technology that will allow TD to implement future enhancements and updates more quickly.
- TD wants to hear from you about how they can continue to improve the site.
- Simply click the Feedback button on the right side of every page in AdvisorClient to let TD know what other features you would like to see on the site.
- If you have questions or comments, please contact TD Ameritrade Institutional at 800-400-6288, option 4, to speak to the technology team.
CA Department of Business Oversight (formerly known as)
For the past 4 business days SAS Financial Advisors, LLC has been working with the Department of Financial Protection and Innovation, formerly known as the Department of Business Oversight (DBO), on a routine audit. This is the state of CA making sure Registered Investment Advisors under the supervision of the state of CA are following the rules and regulations required.
For RIAs that manage client assets up to $100M, this CA agency serves the same role as the Securities and Exchange Commission for RIAs that manage client assets collectively that exceed $100M. SAS directly manages $83M, and we are nearing SEC registration requirements. It’s an approaching milestone for our firm that comes with national oversight as opposed to the CA oversight we have mostly been operating under since the firm’s inception.
The audit has been an interesting process because it requires us to furnish many of the reports and records we prepare on a regular basis. Since Elizabeth joined SAS, our systems and processes have improved geometrically. Our approach in the audit is to learn more about regulatory requirements, and how the state views our business and what we can put into place now to be best poised for SEC registration when that time comes. The emphasis in the audit from the state is investment management primarily but in our initial interview with our entire team we talked about the framework and mission of our business.
Financial planning oversight?
Financial planning is much more than investment management. You, our clients are aware of this. In our initial complimentary meeting with SAS prospective clients our focus is to get to know you and have you get to know how we approach our fiduciary responsibility. Many factors influence a household’s ability to meet their financial and life goals beyond investment management. Cash flow, debt, credit, work income and leveraging workplace benefits and tax strategy are critical to keeping the bills paid, saving, identifying and implementing a path towards life goals.
Client’s ability to have careers that include steady, or bursty, advancement and income impact the likelihood of increasing confidence in the strength of their financial aspirations. Spending plans work to erect guardrails so you know when your savings goals are at risk. Communication within the household/couple is critical to manage the team towards success. We often talk about trade-offs in financial planning as well as options and opportunity cost. How do you measure and regulate the relationship advisors have with clients? How would the state judge the quality of the advisor’s skills in helping clients’ manage these decisions? Not easily!
This audit is providing SAS with confirmation and affirmation that the services and value we offer our clients is at the heart of every meeting with you. For us, we know that we are meeting our mission, not from a State evaluation, but from our clients satisfaction and their progress and increased confidence in achieving their financial and life goals. While it’s straightforward, and a bit bland that the state audit is more concerned with investment management as a function of our role as an RIA, it shines a light on how much more we offer our clients that isn’t being measured, oftentimes in larger magnitudes.
What’s more, it reflects the reality that many RIAs that hold themselves out to the public as “planners/advisors” are likely doing the bare minimum or nothing at all when it comes to full financial planning. Yikes!
Stimulus talks weigh heavy in the media and the practical focus of the economy as well as markets. Looks like fiscal intervention will wait until after the election. The Senate seems to be the roadblock between the White House and Congress closing in on an agreement. The Federal Reserve governors are expressing concern about any further economic recovery without more fiscal stimulus. Interest rates have been heading marginally higher albeit from very low levels. Some Federal Reserve governors are expressing concern over asset values and the market's expectation that the Federal Reserve will rescue markets from declines - sometimes called the Fedout! The Current low rates issued by the Fed are expected to continue for the next 2 or 3 years.
The pandemic 2nd wave is happening across America with devastating impact on the bottom of the K-shaped recovery curve. Unemployment is increasing with the election 2 weeks away and there are signs of asset bubbles at the same time. Single family home prices in the Bay Area are near record highs as mortgage rates remain low.
Covid-era restrictions in SF are beginning to lift. Office buildings, climbing gyms and of course restaurants, are open indoors at 25% capacity. GDP growth for the 3rd quarter will be reported next week with expectations in the range of 30% growth, a record. GDP growth rates set records for declines in the 2nd quarter and will set a record for increases from the depth of the 2nd quarter with the 3rd quarter numbers.