Your clients will get the following letter when you change to a new firm:

Issues to consider when your broker changes firms
You’re receiving this notice because your broker has changed firms. If you’re thinking about whether to follow your broker or stay with your current firm, it’s a good idea to examine key issues that will help you make an informed decision. A good relationship with your broker is surely valuable to you, but it’s not the only factor in determining what’s in your best interest.
Before making a final decision, talk to your broker or someone at your current firm about the following questions, and make sure you’re comfortable with the answers.

Could financial incentives create a conflict of interest for your broker?
In general, you should discuss the reasons your broker decided to change firms. Some firms pay brokers financial incentives when they join, which could include bonuses based on customer assets the broker brings in, incentives for selling in-house products or a higher share of commissions. Similarly, some firms pay financial incentives to retain brokers or customers. While there’s nothing wrong with these incentives in either case, they can create a conflict of interest for the broker. Whether you stay or go, you should carefully consider whether your broker’s advice is aligned with your investment strategy and goals.

Can you transfer all your holdings to the new firm? What are the implications and costs if you can’t?
Some products, such as certain mutual funds and annuities, may not be transferable if that’s the case, you’ll face an additional decision if you follow your broker to the new firm: whether to liquidate the non-transferable holdings or keep just these holdings at your current firm. Either way, there couId be costs to you, such as fees or taxes if you liquidate,
or different service fees if you leave some assets at the current firm. Your broker should be able to explain the implications and costs of each scenario.

What costs will you pay, both in the short term and ongoing if you change firms? In addition to liquidation fees or taxes if you sell non-transferable assets, you may have to pay account termination or transfer fees if you close your current account , or account opening fees at the new firm.(Even if the new firm waives its fees as an incentive to transfer, that wouldn’t reduce any transfer or closure costs at your current firm.) Moving forward, the new firm may have a different pricing structure for maintaining your account or making transactions (such as fee-based instead of commissions ,or vice versa),which could increase or lower your account costs.Your broker should be able to explain the pricing structure of the new firm and how your ongoing costs would compare.

How do the products at the new firm compare with your current firm?
Of course, not all firms offer the same products. There may be some types of investments you’ve purchased in the past or are considering for the future that aren’t available at the new firm.
If that happens, you should feel comfortable with the products they offer as alternatives If you tend to keep a lot of cash in your account, ask what investment vehicles are available at the new firm for the cash sweep account and whether the interest rate would have an effect on your return.

What level of service will you have?
Whether you follow your broker to the new firm or choose another broker at your current firm, consider whether you’ll have access to the types of service, support and online resources that meet your needs.


While the stock market did recently rise after Washington politicians made a fiscal cliff deal, financial advisors tell that there are still some big concerns about taxes and government spending, and clients are a little “frustrated” right now.

Seth Kaplan, who is a vice president with Baird’s, says “I work with a lot of business owners and a lot them are just kind of feeling like that government keeps getting deeper and deeper in their back pocket.” He also said that there are “still a lot of questions and/or unknowns for how the ultimate fiscal cliff issue will settle out.”  Tim Steffen of Baird’s said some fear that there could be some additional tax increases in the future.

Ken Meyers of Baird notes that those couples making $450,000 a year or more and singles making over $400,000 a year now face 39.6% federal taxes. He says that such high-income clients are going to delay hiring for their companies and may slow down spending due to the issue.

Kaplan said that his own clients are “frustrated” not by having to pay more taxes per se, but that they “don’t think this is will make a difference to address fundamental issues,” due to government spending still increasing.  Steffen noted that additional tax increases are “clearly on the President’s agenda.”

In all, Kaplan says that despite the fiscal cliff deal, “I still get this feeling from a lot of my clients that people are still waiting for the other shoe to drop.”

Written by Lisa Swan


The deal Congress made to avert the pending fiscal cliff could have been “much worse” for people in high-income brackets, Financial Advisor Magazine reports. While the deal raises taxes on high earners, it did not extend as harshly on wealthy people as expected. The deal also kept the tax code’s exemptions for estates and gifts, something some had feared would be eliminated.

The fiscal cliff deal passed by Congress last week has $600 billion in increased taxes, as well as spending cuts. The top tax bracket, which covers couples who make over $450,000 a year, or singles that make over $400,000 a year, now face a tax bracket of 39.6%.

Christopher Zander of Evercore Partners told the magazine that “the increases in taxes and limits to deductions are more favorable than expected.” He said that the fiscal cliff deal could have been much worse for wealthy people.

However, the deal raise taxes on those making between $250,000 to $450,000 a year, even if those who make over $450,000 a year didn’t get as bad a tax hit as they expected. In addition, capital gains and dividends went up from 15 percent to 20 percent. There will also be a 3.8 percent surtax on investments by high-income people, to pay for President Obama’s health care law.

There were concerns about the complexity of the deal. “There were hopes that there would be more simplicity to the tax code,” Zander said. “It has now become even more complex.”

Written by Lisa Swan


So much for those transparency promises that Republicans made when they took over the U.S. House of Representatives in 2010, in which they said that any bill they proposed would  be posted online 72 hours in advance of any vote. Investment News notes that with the legislation the Republicans proposed to solve the fiscal cliff issue, that promise was not kept. That’s because the two bills were only posted 24 hours before a vote.

The article says that “as we reach the end of the fiscal-cliff hanger, it’s becoming clear that the transparency promise is being violated.” Investment News says that “both parties are adept at keeping the public in the dark about what’s going on in the capital.”

As it turns out, House Republicans rejected Speaker of the House John Boehner’s so-called “Plan B,” so the point may be moot. But the issue is still one that matters as far as keeping promises.

In addition, as the publication notes, it’s not only Republicans who are keeping citizens in the dark. Investment News notes that President Barack Obama’s own fiscal cliff plan is hard to find details on, with most details coming from “leaks from administration aides that are then published in the media.“

Written by Lisa Swan


It’s going to be a lame-duck Congressional session to remember, thanks to the fiscal cliff. says that when members of Congress return to town this week, they have a lot on their plate, such as the fiscal cliff issue looming, and the Bush tax cuts expiring.

Andrew Friedman, who works for Washington Update, a company that does policy analysis, says he expects to see some big volatility in the stock market over the next few months. “I think we’re going to see a lot of money in motion in the next couple months,” he recently told reporters.

Friedman also said that the U.S. elections last week put us “right back where started,” with the Democrats keeping the presidency and the Senate, and Republicans keeping the House. He said that there will need to be “consensus” between the two parties to get anything done.

And there is a lot to be done this year.  Friedman called the next two months “the mother of all lame-duck sessions,” with the fiscal cliff issue taking up most of Congress’ schedule for the session.

Written by Lisa Swan


Even though Congress will be in a lame-duck session this fall, with elections looming in November, that doesn’t mean that it will be a completely quiet time. writes about what financial advisors can expect to see this fall.

Some of the looming financial issues include renewing the Bush tax cuts, which will end at the end of the year if Congress doesn’t take action. In addition, the House and Senate need to come up with a deficit reduction plan, or face $2.1 trillion in cuts which will kick in.

“Congress is not going to pass any legislation this year before the election,” Tax expert Andy Friedman tells the publication. “We should have just turned out the lights on Capitol Hill.”  And notes that “a favorite maxim in Washington holds that Congress seems only to respond to a deadline — they’ll be facing a couple when they do return — and it might not matter much how the election breaks.”

Friedman also says that he thinks that the markets will be “exceedingly volatile for the rest of the year.” However, he does not think that Congress will fail forever to do something about the budget cuts and tax issues. He does say that the risk of not doing something could get the legislative body to act. “Maybe it is that risk that actually forces Congress to forge a compromise during the lame-duck session, but it’s not going to be easy,” Friedman said.