FPA PUSHES SEC TO CONSIDER CFP BOARD CODE OF ETHICS: The 28,000-member Financial Planning Association has lent its support to a Securities and Exchange Commission proposal requiring registered investment advisors to adopt a specific code of ethics. At the same time, though, it asked the commission to consider the obligations that planners already have under the CFP Board Code of Ethics.

Recently, the commission proposed that federally registered investment advisors be required to adopt a code of ethics that would set standards of conduct to be expected of advisory personnel, including compliance with federal securities laws. In addition, the proposed code would safeguard material nonpublic information about client transactions, and require investment advisors to report their personal securities transactions, and to report promptly any violations.

In a four-page comment letter to the SEC, Neil Simon, FPA director of government relations, noted that many of the SEC’s proposed code requirements duplicate provisions of the CFP Board Code of Ethics.

Simon pointed out that some 18,000 FPA members are already CFP practitioners “who have taken the extra step to demonstrate their professionalism by submitting to the rigorous CFP certification process.”


AIMR, NIRI UNVEIL BEST PRACTICES FOR CORPORATE ISSUERS AND ANALYSTS: A joint task force of the Association for Investment Management and Research and the National Investor Relations Institute has unveiled best practices guidelines for corporate issuers and analysts.

Among the issues addressed in the guidelines released last month are: information flow between analysts and corporate issuers; analysts’ conduct in preparing and publishing research reports and making investment recommendations; corporate issuers’ conduct in providing analysts with access to corporate management; review of analyst reports by corporate issuers; and issuer-paid research.

The task force, formed in August 2003, consists of six AIMR members and eight NIRI professionals from the U.S., Canada and Europe. Jonathan Boersma, AIMR vice president of professional standards, said that when AIMR released its research objectivity standards, it received comments from NIRI on the issue of companies pressuring analysts. The two groups, which Boersma noted are sometimes on “opposites sides of the fence,” decided to try to address the issue in a joint effort.

The guidelines are not specific to the U.S., but are intended to be international in scope. They are available online at www.aimr.org/standards, and open for public comment until May 31. The groups expect to finalize them in the early fall.


FAMILIES FORGING INTO HEDGE FUNDS: Family offices expect to make a tremendous push into hedge fund management over the next three years, according to research by consultancy Prince & Associates.

While many family offices will seek outside hedge funds for their efforts, they’ll also provide affluent families with an alternative to traditional providers, according to Prince & Associates. The percentage of single- and multi-family offices managing hedge funds of funds is projected to double, to 66 percent and 80 percent, respectively. The findings are based on interviews with 92 single-family offices, 234 multi-family offices, and 327 firms that bill themselves as offering family office services.

Families also plan, to a lesser extent, to manage single-manager hedge funds. About a third of single-family offices manage hedge funds now, but 41 percent expect to manage them in three years. The figures are similar for multi-family offices, with 31 percent responding that they presently manage single-manager hedge funds and 42 percent reporting that they expect to manage them in three years.

The majority of single- and multi-family offices have experience hiring hedge fund managers. About 80 percent have invested with an outside single-manager hedge fund in the last two years. Single-family and multi-family offices — those that provide services to outside families but are anchored by a core family whose assets represent a minimum of 30 percent — rely heavily on networking when picking hedge fund managers, noted Russ Prince, president of Prince & Associates. He added that, while family offices do look at databases and talk to capital introductions groups and third-party marketers, they want some type of connection to the manager.

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