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       Managed Account Wrap Managers Can't Meet New AIMR Reporting Guidelines, MMI Poses Resolution by Steve Winks. Managed account managers participating in wrap fee programs will not be able to meet AIMR's new guidelines for performance reporting by July of next year. The problem is outdated legacy systems which prohibit the electronic transmission of data that would allow managers to be in compliance with regulatory and AIMR reporting requirements. This is a problem for consultants because AIMR compliance is imperative if one's professional investment and administrative counsel is to be seriously considered for engagement. AIMR correctly sees that consultants are equally accountable for the investment recommendations made to individuals as they are to institutions. Essentially, AIMR asks: Are retail brokerage firms willing to expend the resources to support financial advisors in adding value? The recent market downturn has provided clarity for the financial advisor. Fee-based advisors who are capable of adding value, continue to grow their business. AIMR compliance tells us which retail brokerage firms are serious about the new advice business model, the consultant and adding value. (Download the article in pdf format with graphics or for a faster download, in pdf format without graphics.)

       New Bond ETF's Enable All-ETF Portfolios by J.D. Steinhilber, AgileInvesting.com. How much you can charge for the engagement of your professional investment and administrative counsel is, in large part, a function of the inherent cost structure of the investment vehicles you use in portfolio construction. The more expensive the investment vehicle and the more difficult the investment environment, the more scrutiny the investor will apply to the cost of your counsel. Thus, using ETFs at 22 basis points to construct portfolios will give you far greater latitude in pricing your services than mutual funds at 150+ basis points. And ETFs afford other advantages in portfolio construction. (Download the article in pdf format.)

       Can the Managed Account Business Cross the Chasm into the Financial Services Mainstream? Growing the Managed Account Business from $0.5 Trillion to $5 Trillion by Steve Winks. ... Our ability to grow the managed account business is constrained by the number of financial advisors who are capable of providing high level, comprehensive, expert advice. Thus, the success of the managed accounts is tied to the skill of the financial advisor, which, in turn, is tied to the process and technology necessary to add value. Thus, in order to grow the managed account business, we must take breakthrough technology that empowers the financial advisor to add value, from a small number of early adopters to the mass market. This is the primary focus of venture capitalists and technology firms. The difference between a technology being worth billions and being worthless is whether it can cross the huge chasm between early adopters and the mass market. It is the difference between early adopters and the mass market tells us what our enabling technology should look like, if managed accounts are going to grow exponentially from $0.5 trillion to $5 trillion over the next five years. (Download the article in pdf format with graphics - Part I and Part II, or download the article in without graphics - a faster download - Part I and Part II.)


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       What Has Better Returns and Lower Risks Than U.S. Equities? Managed Futures by Steve Winks. ... Either we are on the verge of extinguishing all the science-based valuation underpinnings of the U.S. equity markets or we are on the verge of a significant market correction that will radically reprice the U.S. equity markets. In either event, the U.S. equity markets do not offer an attractive value proposition .... So, what do we do? There are other areas of investment which have long warranted our attention whose time has finally come. If you have limited knowledge of managed futures, it's time to take a look - you're in for a stunning revelation. Managed futures have virtually no correlation to the U.S. equity markets, providing both a higher return and lower risk. (Download the article in pdf format with graphics or download the article without graphics in pdf format - faster download.)

        Surz/Senior Consultant Style Analysis: Enough! It's Time for Greed to Overcome Fear (Or, Confusing Style with Skill Can Be Costly) by Ron Surz, President, PPCA, Inc., May-June 2002. The market went down again in the second quarter of 2002, this time by about 13%, bringing the cumulative loss for the new millennium to over 30%. Growth stocks have been decimated, losing 65% of their value since January 1, 2000. How much more can we take? In the tug-of-war between fear and greed, isn't it time for greed to kick in? In the following, we try to put these recent losses into perspective by first looking at the current quarter, then the current cycle and lastly, the recent history of cycles, especially as they relate to investment styles. (Download in pdf format.)

        New DOL and Congressional Pension Reform Initiatives Create Insatiable Demand for Qualified Professional Investment Counsel, Consulting Ranks Poised for Extraordinary Growth by Stephen C. Winks. Pension reform introduces a new level of advice by "fiduciary advisors" for plan participants and institutionalizes advice in ways that impact the entire financial services industry. (Select: Download article in pdf format with graphics or download article in pdf format without graphics - a faster download.)

        Do MDA's Enhance or Dilute the Investment Process? by Stephen C. Winks. "Mutual fund and insurance companies are enthusiastically entering the separate account business, and I only hope that with all their marketing power they do not lose sight of the consultative process and revert back to their more accustomed product orientation. For if we move to a homogenized client profile and automated list of hot dot managers, we are helping those who would push investment management consulting into the prospectus-driven mutual fund box." - Peter Muratore. (Download article in pdf format.)

        Managed Accounts 201: Key Steps to Success with Managed Accounts by Peter F. Muratore, Chairman, Money Management Institute. The growth of the managed account industry is only limited to how fast technological innovation can occur. It reminiscent of how the mutual fund industry was impacted by new technologies in the early 80's and how the equities markets were impacted in the 60's and 70's, making it possible for the NYSE to go from struggling with 15-20 million share days to the massive level of volume we have seen over the past decade. (Download article in pdf format.)

        Schwab To Announce Advisor-Branded Web Services, The Next Generation of Advisor Support by Stephen C. Winks. Charles Schwab has changed the course of the financial services industry and is about to do it again. It championed the mutual fund supermarket which has been the catalyst for the emergence of fee-based advice within the financial services mainstream and effectively commoditizing financial product access. It championed internet brokerage which commoditized trade execution and shifted the balance of power from trade execution to adding value through fee-based advice. Today, the vast majority of the assets at Schwab are advised by advisors who engage their professional investment and administrative counsel for an on-going advisory fee. And now Schwab is substantially broadening its market by creating advisor-branded web services designed to remove the administrative and resource burden of the financial advisor who wishes to add value. (Select: Download article in pdf format with graphics or download article in pdf format without graphics - a faster download.)


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        Why MDAs Will Reshape The Course Of The Financial Services Industry by Stephen C. Winks. In this difficult market environment, the multiple discipline account (MDA) where there are multiple managed accounts in one account, is an important key for a large number of financial advisors to adapt their business around adding value through multiple manager portfolio construction. (Select: Download article in pdf format with graphics or download article in pdf format without graphics - a faster download.)

        Core/Satellite Portfolio Construction by Mark Chamberlain and Jay Jordan. Core/Satellite portfolio construction reconciles the seemingly irreconcilable debate between the respective benefits of index and active management. Core/Satellite provides the framework that enables asset allocation models to be implemented with more purity - and potentially less cost - than those devoted 100% to active management. Even so, Core/Satellite leaves room for active money managers to add value. (Select: Download article in pdf format with graphics or download article in pdf format without graphics - a faster download.)

        The Benefits of Long/Short Investment Strategies in a Low-Return Stock Market by Ricardo L. Cortez, CIMA. The goal of long/short strategies is generally to invest in undervalued stocks and to sell short overvalued stocks, thus achieving absolute positive returns and less risk than the overall market. (Download article in pdf format with graphics.)

        Consulting and Hedge Fund Investing by Rick Cortez, CIMA. Today, while most investors concentrate on traditional all-long investment vehicles, an increasing number of alternative investment strategies, such as hedge funds, are being considered as complements to existing stock and bond investments. Many of these hedge fund strategies have been shown to offer the investor additional means of increasing return while reducing risk through diversification, especially in markets in which traditional stock and bond markets perform poorly. ((Download in pdf format)

        Adopting an E-Commerce Strategy by Darlene DeRemer, Managing Director, NewRiver, Inc. There's no question the Internet will continue to impact our world in ways never imagined. It has made our home life simpler, enabling us to purchase consumer goods from books, groceries and automobiles with just the click of a mouse. The internet has even allowed us to become our own portfolio manager, giving us the ability to take charge of our personal finances around-the-clock. (Download in pdf format)

        What Is the New Economy? by Robert Morgenthau, Global Head of Marketing and Distribution, Lazard Asset Management. The new economy is about the radical effects of information on the economy as a whole. What then, is the impact of the information-driven new economy on companies? Where might the consulting business head as a result of the continuing shift into the new economy, and how should we confront these issues? (Download in pdf format)

        GAO Finds Mutual Funds Industry Is Not Responsive to Basic Information Needs by Stephen C. Winks. The United States Congress has asked the General Accounting Office (GAO), the primary investigative arm of the legislative branch, to research the costs of mutual fund offerings. (Download in pdf format)

        House Votes to Eliminate Estate Tax, Focus of the High Net Worth Market Shifts to Investments from Form of Ownership by Stephen C. Winks. The U.S. House of Representatives has overwhelmingly passed the Death Tax Elimination Act, House Bill 8, by a lopsided vote of 279 to 136. The bill will phase down tax rates and repeal estate tax, gift tax and generation-skipping transfer taxes within 10 years. (Download in pdf format)

        Merrill Lynch Study Says "Global High Net Worth and Ultra High Net Worth Markets Will Double in Five Years by Stephen C. Winks. The Fourth Annual Merrill Lynch/Gemini Consulting World Wealth Report paints an attractive picture for investment management consultants at the high end of the advice business. (Download in pdf format)

        Lockwood Goes Direct: RunMoney.com Takes Separate Account Management Directly to Investors by Stephen C. Winks. RunMoney.com is provocative by making consumer question the validity of mutual funds and direct on-line brokerage; it interjects professional investment counsel and separate account management into the mix. (Download in pdf format)


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        Microsoft Ruling Suggests Old Anti-Trust Laws Are Not in Tune with the New Economy by Stephen C. Winks. Over the past decade, few would argue that we have been in the most dynamic economic environment ever and that it is due in part a function of a technological revolution that forever has changed global commerce. (Download in pdf format)

        J.C. Bradford Merges with PaineWebber and Cites Internet Brokerage Changing Economics of the Business by Stephen C. Winks. J.C. Bradford, the largest independently owned brokerage firm in the southeast and one of the industry's few remaining partnerships, has been acquired by PaineWebber. The significance of the J.C. Bradford acquisition is tremendously important in illustrating the direction of the U.S. brokerage industry. (Download in pdf format)

        Is MSDW On-Line The Financial Services Firm of the Future? by Stephen C. Winks. Phil Purcell, the CEO of Morgan Stanley Dean Witter has a brilliant solution that balances all interests of the organization but advances the thesis of investment management consulting. MSDW is the most successful firm on Wall Street in building its proprietary asset management arm, which is in conflict with an objective manager selection process integral to investment management consultant. (Download in pdf format)

        Out in Front Again, Jim Owen Writes About Turning Volatility into an Advantage by Stephen C. Winks. When it comes to investment trends and the dynamics of third party distribution, Jim Owen has an undeniable knack for being ahead of the curve. Thirty years ago, while at Bache & Co., Jim launched the first retail investment management consulting initiative on Wall Street. Fifteen years ago, when you could have put all the members of the investment consulting profession nationwide into one room, Jim founded the Investment Management Consultants Association (IMCA) .... (Download in pdf format)

        Schwab Doubles Merrill's Growth Rate, Battle Between Asset Gathering and Transactions Has Clear Winner by Stephen C. Winks. Over the last 15 years, Charles Schwab has grown from an obscure discount brokerage firm where client accounts averaged $15,000 to a full-service powerhouse that is challenging the supremacy of the nation's top brokerage - Merrill Lynch & Company .... In essence, Merrill, the largest and most successful commission brokerage firm in the world, must reinvent itself. (Download in pdf format)

        Advent Introduces A Consolidated Reporting Solution, Trusted Network by Stephen C. Winks. Trusted Network provides the technology infrastructure that allows institiutions to offer investors a view of all their investment assets custodied with many other institutions into one consolidated account. (Download in pdf format)

        Senate Banking Committee Studies Centralization of All Stock Quotes While NYSE and NASDAQ Talk Merger by Stephen C. Winks. The challenge the regulators and legislators face is the Exchange's specialists, market makers and traders own the majority seats on the NYSE which governs the Exchange, and they're not about to put themselves out of business. (Download in pdf format)


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        Fidelity's On-Line Investors Help Lehman Brothers Become a Major IPO Underwriter by Stephen C. Winks. Fidelity has found a strategic partnership that works brilliantly and raises the specter of merger talk. After an unsuccessful alliance with Salomon Brothers in 1997 which gave Salomon Brothers access to Fidelity brokerage services' 15 million retail investors, Fidelity has had spectacular success with Lehman Brothers. (Download in pdf format)

        Schwab and U.S. Trust Merge to Form First Full-Service, Internet-Based, Wealth Management Firm by Stephen C. Winks. Just when we thought the full-service commission brokerage firms has preempted the internet brokers with a new advice business model which played to their weakness by requiring the discounters to compete on the basis of the depth and breadth of their advice, Charles Schwab complete changes the rules again. With Schwab's merger with U.S. Trust, it is building a new type of full-service financial services firm which will provide an extremely high level of professional investment counsel over an internet-based delivery platform. (Download in pdf format)

        Fidelity and AICPA Form Alliance to Help CPA's Meet Growing Demand for Investment Advice by Stephen C. Winks. The American Institute for Certified Public Accountants (AICPA) and the Fidelity Institutional Brokerage Group have announced a strategic alliance that establishes Fidelity's Institutional Brokerage Group as the exclusive provider of custody and clearing services in the AICPA's Center for Investment Advisory Services. (Download in pdf format)

        E*Trade Circumvents Advisors to Provide Advice Direct to Consumers by Stephen C. Winks. E*Trade, a global leader in electronic global finance, has announced an agreement with DirectAdvice.com to integrate their direct advice financial planning module into E*Trade's web site in the first quarter of 2000. (Download in pdf format)

       Schwab Goes Upstream to Assist Separate Account Managers. Will Consultants Be Next? by Stephen C. Winks. Discount broker Charles Schwab who started the internet business brokerage revolution continues to transform itself and the financial services industry at-large. Schwab is going upstream from the do-it-yourself and the independent advisor market to cultivate the 1,600 separate account managers who have $200 million or more under advisement. (Download in pdf format)

         Converging Events Changing Our Industry: People, Firms, Honors and Ideas by Stephen C. Winks, January 2000. (Download in pdf format)

         What Makes a Firm Outstanding? Evolving a Unifying Vision for CitiGroup and BankAmerica by Stephen C. Winks. Massachusetts's Institute of Technology's Sloan School of Management in the late 1980s analyzed firms in eight sectors of the economy and identified striking similarities in what the most successful firms in those industries were doing. Those best practices of the most successful firms were later summarized in the book, Made in America. Most of these best practices (such as breaking down organizational barriers, flattening organizational hierarchies, developing closer links with consumers and suppliers, adopting innovative human resources practices, committing to continuous improvement, integrating new technology with production and marketing strategies) were relatively well known even then, and today, have become conventional wisdom. (Download in pdf format)


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         The Independent Fee-Based Financial Advisor Industry: What Is It? Where Is It Going? Why Might You Want To Go Along. by Chip Roame, Investment Management Strategies. While many of you have been toiling away at one of the wirehouses and slowly moving your practice to one of consulting, the independent fee-based financial advisor industry has grown at a spectacular rate to over 15,000 advisors managing in excess of $1.3 trillion. Consumers love this new independent fee-based model, choosing financial planners and independent fee-based advisors as the most reliable sources of financial advise and rating their own advisors an 8.7 on a 10-point scale. (Select: Download in pdf format or for a quicker download, download in pdf format without graphics)

         Major Plans Engage Retail Consultants by Stephen C. Winks. The increasing presence of retail financial services firms with major consulting initiatives among the top institutional consulting firms reflects the metamorphosis that is occurring within the brokerage industry and the operating leverage of a national financial services franchise. The major U.S. brokerage firms have been actively developing their investment management consulting business for the last 10 years, and Smith Barney, Merrill Lynch and Prudential for the past 25 years. (Download in pdf format)

         Managing the Technology Challenge by Stephen C. Winks. It has become widely acknowledged in the industry that today's financial product and services menu has become so mind-boggling that no single individual could understand it in its entirety, much less articulate it to the client. Clearly, if tangible and quantifiable value is to be provided by today's broker, there must be a process - a technology - through which the mind-boggling array of information can be managed in terms meaningful to each investor's unique needs and circumstances. (Download in pdf format)

         Money Management: Concentrated Portfolios by Stephen C. Winks. Last year, over 98% of money managers did not beat the S&P 500, and over the long term, 80% of the managers do not beat the index. Does this mean that we all should join the rush to index funds? The indexing argument is compelling and is one that Vanguard has used to surpass Fidelity as the industry leader in net new assets amassed for the year. “The performance problem,” says Dennis Bertrum, president of Bank Street Advisors, “results from over-diversification.” (Download in pdf format)

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