NASD Fines AmEx Financial Advisors $350K for Improper Sales: The National Association of Securities Dealers has censured and fined American Express Financial Advisors Inc. $350,000 for its questionable sales of variable annuities and variable life insurance products.
The self-regulatory organization for the securities industry found that the firm failed to establish, maintain and enforce adequate supervisory policies and procedures governing the sale of variable annuities and variable life insurance products during a 30-month period ending in 2000. American Express neither admitted nor denied the NASD’s findings.
The NASD said that some of the firm’s registered representatives omitted material facts when selling variable annuities into qualified plans. Others failed to determine customer need for a benefit offered by a variable annuity other than tax deferral. Such sales violate NASD rules because the reps "lacked a reasonable basis for believing that their recommendations were suitable."
In some cases, representatives didn’t adequately explain to customers the costs and features of variable annuities and failed to compare and contrast variable annuities with mutual funds in instances where the customer’s needs might have been better met through mutual funds.
Business Transitions Launches Online Buy/Sell Forum: Business Transitions, the firm that created FP Transitions, an online forum for buying and selling independent financial planning practices, plans to do the same thing for CPAs with CPA Transitions.
"We saw that independent reps had no way to sell their book of business," said principal Bill Grable, who is also a CPA. "Our plan was to become business brokers for independent reps and ultimately do the same thing for CPAs and insurance firms because we saw the three industries converging. We’re different than regular business brokers because we ... work for both the buyer and the seller."
Sellers list their practice on the site by answering a number of questions, such as the demographics of their client base, where their practice is located, what percentage of their fees come from audit and compilation work, and their overhead percentages. Buyers may also post ads. Currently, listings are free.
CPA Transitions sends a blind e-mail (the seller’s name isn’t disclosed) to all buyers in that geographic location. Interested buyers respond directly to the seller. The seller decides whether to respond based on the information supplied by the buyer. The seller’s identity is only disclosed if they choose to meet with the buyer. If the deal goes through, CPA Transitions gets paid a 7 percent commission, to be split evenly between buyer and seller. CPA Transitions provides all of the contracts.
The company works with independent contractor Stewart Title, a national title and escrow company, which helps facilitate deals and holds money in escrow. Grable estimated that there might be as many as 5,000 potential transactions involving independent CPA firms in any one year.
Bankruptcy Filings Set Record: In what both consumers and businesses hope is not an ominous harbinger of things to come, bankruptcy filings for the third quarter, ended Sept. 30, set a record with 401,306 filings.
According to data from the Administrative Office of the U.S. Courts, that figure was a 12 percent rise from the year-ago third quarter. Personal bankruptcies accounted for the vast majority of the aggregate figure with 391,873 recorded. Business filings saw a 1 percent dip from the year-ago period, with 9,433. Roughly 70 percent of the total filings were Chapter 7.
CFP Board Awards Grant To Texas Tech: The Certified Financial Planner Board of Standards has awarded Texas Tech University a grant of $2 million over seven years to enhance and expand graduate programs in financial planning. The grant, coupled with $4 million in matching funds from the university, is designed to be a pilot for future education initiatives nationally and internationally. Students who receive financial assistance under the grant will commit to spending time teaching financial planning.
Texas Tech currently has the only Ph.D program among CFP Board-registered programs. There are 253 registered programs at 158 accredited colleges and universities nationwide.
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