I was quoted in two articles this week – one on the trends in the RIA space and the other on bullying in the mutual fund industry.

The first story, published in yesterday’s GatekeeperIQ (A Financial Times Service), had to do with the announcement by Securities America that they were unveiling a new hybrid platform geared toward smaller RIAs. The platform allows for the use of multiple custodians and can accommodate fee-based as well as commission business.

I was asked to comment on whether this was part of a greater trend in the industry and if asset managers would be able to benefit from new platforms such as this. To quote from the article: “The custodian-agnostic platform is an attractive proposition for small advisors who want to make the switch to a fee-based practice, say Andrew Klausner founder and principal advisor of AK Advisory Partners. “This is kind of a stepping stone into that, because they don’t necessarily have to change who their custodian is and therefore move client accounts,” he says. While reaching small dually registered advisors might not be a top priority for managers, they shouldn’t ignore this space. Still, he says, such advisors require support and attention. “You’ve got a larger number of smaller producers, so to have an impact is a greater effort,” Klausner says.”

The second articles was published in today’s Ignites (A Financial Times Service) and dealt with the results of a survey about bullying in the mutual fund industry. In the survey, nearly two-thirds of respondents said that bullying was prevalent in the mutual fund industry (30% actually said “very prevalent.”) This compares to 50% in the U.S. overall.

To quote from the article: “”Bullying should never be allowed or tolerated,” says Andy Klausner, founder and principal of AK Advisory Partners. “It should be specifically defined in the employee manual, including what bullying is [as] defined by the company … and what the penalties are.””

I was also asked about the different between bullying and competition. Again, to quote from the article: “Moreover, firms should not confuse fostering competition among employees, which can be healthy for a firm, with allowing bullying to occur, experts note. As Klausner says, bullying is “completely different” from competition. He defines competition as “setting goals and rewarding appropriately” and bullying as “forcing someone to behave in a manner that you want them to.””

Any thoughts?

I was asked to write an opinion piece for FinancialAdvisorIQ (A Financial Times Service) about the types of mistakes advisors make when presenting products to clients. Mistakes can result in lost opportunities for clients and a loss of revenues for advisors. Advisors should always be upfront about fees and discuss the potential for underperformance.

Top mistakes include:

Too much jargon. Advisors sometimes use too much industry jargon when explaining how products work, rather than stressing their benefits to the client. Clients don’t care about the name of the program they are investing in. They want results. Advisors should “sell” the concept and its benefits through the consultative process and bring in the specific product names only when they have to.

Whether the strategy is a mutual fund or individually managed accounts, advisors need to explain how these products will help the client reach his or her goals. It helps to ask clients about how much detail they want. Advisors should never oversell products, because the goal in the case of underperformance should be to replace the investment, not the advisor who pushed it.

Lack of transparency. Another cardinal sin in this realm is failing to explain fees clearly and openly. Costs should be discussed up front. If the client has to ask about them, it is probably too late. Advisors should describe the types and frequency of fees and be sure to distinguish between different types of investments — a no-load mutual fund versus A shares, for example. Further, advisors should ensure that clients are able to conduct apples-to-apples comparisons between different product types when needed.

Failure to understand the product. While advisors don’t want to inundate clients with too much product information and detail, they also want to avoid getting stuck with unanswerable questions. Presentations should be customized for each client; engineers will probably want to know more of the nitty-gritty of a product, whereas doctors might be more curious about what other doctors are invested in.

Jumping on “hot dot” products. While advisors are well served by researching new products and incorporating them into their business as appropriate, running to sell the new hot product is rarely the right strategy. The product needs to be the most suitable investment at this point in the client’s investment life. The client’s larger investment goals, their unique needs and the state of their existing portfolio should play the most important role in a product recommendation.