The man who leads the TD Ameritrade Inc. division serving registered investment advisers is pitching a new way for those firms to get paid as they stare down increasing competition from the online portfolio managers called robo-advisers.
Thomas Nally, president of TD Ameritrade Institutional, said firms should consider replacing the widely used fee based on assets under management with one based on total wealth under advisement.
“Don’t charge on just that one little slice of the pie. Why don’t we charge a lower basis point number on total wealth that you’re advising on so you can have the same number as some of these robo-advisers, but provide much more services?” said Mr. Nally.
According to the proposal, if an adviser provides tax or estate strategies associated with a home or business, for instance, they would assess a total fee that was linked to those assets, in addition to the client’s securities portfolio. By accounting for the wider array of assets covered, the overall fee could be lowered — making it competitive with the low headline figure advertised by online advisory firms, Mr. Nally said.
Mr. Nally’s remarks to a set of his firm’s top advisers Monday and in an interview with InvestmentNews Wednesday, reinvigorated discussion of alternative fee structures for financial advisers, a topic of years of discussion and consternation.
Some advisers see fees linked to assets under management as devaluing aspects of their service offerings beyond securities and investment manager selection, such as estate and tax planning. Others see the fee as an easy way to be rewarded for investment decisions that benefit clients and to participate, alongside those clients, in the upside of a rising market, such as the one enjoyed by U.S. stocks since 2009.
Figures on the number of advisers using fees for engagement or other alternative fee models are hard to come by. But anecdotally, the use of such models is marginal. That’s despite the advocacy of people like Sheryl Garrett, a fiduciary advocate who recommends hourly fees for advisers in her namesake network.
At the same time, in their move to transition to fee-based business and more planning-centric relationships, wir
Getty Images @Lebeaucarnews Here's something those trying to cash in on frequent flyer miles or points seldom hear: It's now easier to book the flight you want to the destination you want. The annual Switchfly Reward Seat Availability Survey, which gauges the frequent flyer programs at 25 of the world's largest airlines, found seats were available for frequent flyer redemption on 72.4 percent of the flights checked. That's a 1.3 percent increase compared with the prior year. "I was surprised by this year's results," said Jay Sorensen, president of IdeaWorks consulting firm, which surveyed 7,640 flights in March. "Typically, when you see the industry recovering from financial duress, one of the things they cut back on is giving away free seats." Instead, many airlines have actually made frequent flyer seats available on more of their flights. Sorensen credits the boost to the independent credit cards many flyers now use to rack up award miles that they can redeem without restrictions. Those credit cards, like the one offered by Capitol One, have become popular with consumers, and have forced airlines to make it easier for members of their own frequent flyer programs to cash in miles or points in order to compete. "[The airlines] want to compete against the bank-issued credit cards, so this is one way for them to do that," Sorensen said. Another factor is an accounting rule that says airlines can book revenue from the sale of frequent flyer miles only after the passenger has traveled. Low-cost carriers offer the most options As has been the case in past years, low-cost carriers have the most flights offering seats for frequent flyer redemption, according to the study. On average, 95.8 percent of the low-cost airline flights surveyed had seats available. By comparison, traditional airlines had frequent flyer award seats on 65 percent of their flights. That's up 4 percent from last year, but still well below the availability offered by low-cost airlines. Airlines with the most flights with seats open for redemption 
) released its fourth quarter earnings. The cruise ship company reported a net loss, but beat analysts’ expectations. 
Paul Sancya/APDetroit skyline DETROIT -- A judge cleared Detroit to emerge from bankruptcy Friday, approving a turnaround plan that will require discipline after years of corruption, mismanagement and an exodus of residents brought this one-time industrial powerhouse to financial ruin. "What happened in Detroit must never happen again," Judge Steven Rhodes said in bringing the case to a close a remarkably speedy 16 months after Detroit -- the cradle of the auto industry -- became the biggest city in U.S. history to file for bankruptcy. The plan calls for cutting retiree pensions by 4.5 percent, erasing $7 billion of debt and spending $1.7 billion to demolish thousands of blighted buildings, make the city safer and improve long-neglected basic services. In signing off on the plan, Rhodes made a fervent plea to residents who expressed sorrow and disgust about the city's woes. "Move past your anger. Move past it and join in the work that is necessary to fix this city," he said. "Help your city leaders do that. It is your city." 
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Andrew Harrer/Bloomberg via Getty Images MasterCard (MA), the world's second-largest debit and credit card company, said it was extending its zero-liability policy for cardholders in the United States to include all PIN-based and ATM transactions. The move follows several data breaches at U.S. companies including one at Target (TGT) late last year involving the theft of about 40 million credit and debit card records. "The move by MasterCard just enhances the sense of security for people at a time when it has been shaken up significantly in recent times," said Gil Luria, an analyst with Wedbush Securities. Zero-liability protection currently covers card transactions that require a customer's signature but doesn't apply if an account holder's personal identification number, or PIN, was used for unauthorized transactions. The new policy will take effect in October. Zero-liability protection means the account holder won't be held responsible for unauthorized transactions. Larger rival Visa's (V) zero-liability policy doesn't apply to PIN-based and ATM transactions, according to information available on the company's website. "The changes that we're making in cardholder protection combined with our efforts to move the U.S. payments industry to EMV chip technology will help deliver safer shopping experiences to consumers," said Chris McWilton, president of North American markets for MasterCard. The two companies have urged banks and retailers to meet an October 2015 deadline for the adoption of "EMV" chip technology that would make it safer to pay with plastic. "This all comes back to the adoption of EMV. Of all the cards that are breached at ATMs, a majority of them are non-EMV cards. This is just another way for the company to impress upon the importance of quickly adopting EMV cards," said Philip Philliou, managing partner of Philliou Partners, a firm that helps banks and retailers select payment processors. U.S. cards issued by MasterCard will also carry identity theft resolution assistance, which helps cancel missing cards, alert credit reporting agencies and conduct searches to detect if stolen confidential data appears online, MasterCard said Wednesday. The financial impact from the extension of the coverage is expected to be minimal for MasterCard, according to Luria. MasterCard shares were down less than 1% to $76.98 in afternoon trading Wednesday on the New York Stock Exchange. Last week, eBay (EBAY) became the latest victim of a cyberattack that compromised customer data and the company asked 145 million users of its online commerce platform to change their passwords.
Image Source/Getty Images When it comes to financial shenanigans, the top targets of senior citizens' complaints in this country are debt collectors, the Consumer Financial Protection Bureau reported Wednesday. Seniors commonly report being hounded and threatened by debt collectors -- and about half of those reported incidents involved debts they didn't incur. From July 2013 through September of this year, the agency received 25,000 complaints from older consumers, and more than a third were about debt collection. "It is increasingly common for older Americans to carry debts into their retirement years, and consumers living on fixed incomes often struggle to pay off these debts," CFPB Director Richard Cordray said. "Older Americans deserve to be treated with the respect they have earned." Debt collection is a huge industry in the U.S. Nearly 5,000 companies collect debts, and about 30 million consumers have debt that is subject to collection, the CFPB said. Making Them Pay Federal law prescribes what debt collectors can -- and cannot -- do. Collectors can only call during certain hours, and they can't just say whatever they feel like to coerce you into paying. Harassing consumers, chasing after family members of those in debt (or family members of deceased debtors) and threatening arrest or garnishment of federal benefits all cross the line. The Federal Trade Commission offers a guide to the Fair Debt Collection Practices Act. If a debt collector violates the terms of the Act, you can sue them and collect up to $1,000. In addition, class-action lawsuits are regularly filed against collectors who are accused of violating the law. Such lawsuits can result in up to $500,000 in penalties. While such lawsuits -- even when won by the plaintiffs -- won't result in the erasing of people's debts, they can help ease some of the burden, and hold unscrupulous collectors responsible for their actions. If you're dealing with a debt collector whom you believe has crossed the line, you can report them to your state Attorney General's office, the Federal Trade Commission, and the Consumer Financial Protection Bureau. More from Mitch Lipka
OJO Images Ltd/Alamy I didn't have much of a motivational problem when it came to creating my first will, shortly after my son was born. But now, more than 22 years later, he's a college graduate with full-time job in his field of study, and can support himself. (Yay!) But despite the change in our circumstances, we were dragging our feet on updating our estate plan to fit them. "I think people just have trouble accepting their own mortality," said Ken Cutler, the Princeton, New Jersey, attorney helping to update my will. And the only purpose of a will is to deal with issues involving your death. Flashback to 22 Years Ago Let's start with the will my wife and I prepared after the birth of our son. We were both working and had retirement plans, some savings and life insurance -- but we were far from wealthy. Obviously, if I passed away, everything would go to my wife: all of the assets, all of the responsibilities. But the hard decisions were about control: Who would be the guardian to raise our little boy in the event that we both passed away (which is not quite as unlikely as it sounds, because of car accidents and the like), and who would handle the money we had left for him. "A lot of times people go in to do a will thinking it's about, "Who will get my property?" But it's a lot more complicated than that," said Cutler. "You don't come in thinking about having to decide between a sister or a brother-in-law, or who's going be the guardian." After weighing our choices, we decided that my wife's younger brother was the best fit. He had two young boys of his own. Our Situation Is Different Today Back to today. We first met with Cutler about two years ago, when our son was about to turn 21. He told us what was involved in crafting a new plan: selecting trustees and executors, dealing with estate taxes and maybe setting up a trust account. We waffled, interviewed other attorneys, and put the task back on the to-do list, where it sat. College graduation motivated us to try again. My wife and I drew up power of attorney documents and health care directives that appoint each other to handle those responsibilities. Our son is the back-up. Cutler laid out the new issues we'd have to consider, such as the possibility that we'll have a daughter-in-law one day, and maybe even grandchildren. These future family members ought to be accounted for well before we even know who they are. "You want to plan for and avoid a situation in a young marriage, and prevent the in-law from receiving your money" if the marriage dissolves. And even though we are fortunate to have a son who is sensible and wise beyond his years, we wouldn't want him to suddenly find himself in possession of an inheritance in a form that could easily be blown. So, at Cutler's suggestion, we have established terms in our wills for a trustee who would give him access to the money at three stages over the next few decades, if we're not here to spend it ourselves.
Damian Dovarganes/APA "Captain America" Chopper from the 1969 film "Easy Rider." | A star-spangled chopper reportedly ridden by Peter Fonda in the classic film "Easy Rider" sold for $1.35 million, making it one of the most expensive motorcycles ever sold. Auction house Profiles in History sold the bike over the weekend for far above the reserve price of $1 million. The chopper, known as the "Captain America" chopper for the name of Fonda's character in the 1969 film, was owned by Los Angeles collector Michael Eisenberg. The price came despite media reports that cast doubt on the authenticity of the bike. The Los Angeles Times reported that an earlier "Captain America" chopper had been sold that also claimed to be the last remaining of its kind from the film. Fonda told the Times before the sale: "There's a big rat stinking someplace in this."
Elaine Thompson/AP There were plenty of winners and losers this week, with the world's leading search engine failing to live up to expectations on decelerating ad growth and the leading premium java retailer coming through with a pay increase at a time when other establishments are being criticized for their wages. Here's a rundown of the week's best and worst. Google (GOOG) -- Loser Is an earnings miss really a surprise if it just keeps happening? Google posted a lower-than-expected profit in Thursday's quarterly report, but this is the fourth consecutive time that the search giant has failed to live up to Wall Street's bottom-line targets. That isn't a big deal. Google's investing in data centers and new businesses that don't carry the kind of immediate payoffs that it has in paid search. The only problematic aspect of the report is that paid clicks rose just 17 percent over the prior year. That may seem like a lot, but Google had posted gains of 26 percent and 25 percent during the year's first two quarters. Starbucks (SBUX) -- Winner It pays to be a barista. Starbucks announced on Thursday that its employees will receive a pay increase come January. "The company didn't disclose pay rates, which vary according to market; a Starbucks employee recently told The Seattle Times he started at $9.50 an hour. Job-reviews website Glassdoor indicates the average barista wage is $9.32 an hour." At a time when many fast-food chains and retailers are being taken to task for their low wages, Starbucks finds a way to shine. It's not the only change at Starbucks. It's relaxing many of its conduct and dress codes. It will allow employees to wear nose studs. They also won't have to cover up tattoos, as long as they are not on the face or neck. Baristas who used to be able to have a complimentary drink during a shift can now also have a food item. The changes are ultimately about attracting and retaining employees, lowering its turnover and training costs. Netflix (NFLX) -- Loser If you're known for providing conservative guidance, you'd better not fall short. Three months ago, Netflix was forecasting that it would close out the third quarter with 53.74 million streaming accounts worldwide. It wound up having just 53.06 million subscribers on its rolls. Netflix blamed the shortfall on consumer reaction to its May price increase, but it may be more than that. After all, Netflix also grandfathered in existing members to the original $7.99-a-month rate. If $8.99 was too high to woo new subscribers, wouldn't the grandfathering at least help retention efforts? Another loser here is BTIG Research, which had upgraded the stock the day before the earnings report. Cord Cutters -- Winners Folks kissing their hefty cable and satellite television bills goodbye are starting to get more options for video entertainment. Time Warner's (TWX) HBO and CBS (CBS) announced plans for stand-alone streaming services. CBS is charging $5.99 a month for its streaming platform that offers access to live and legacy CBS content. HBO didn't offer pricing details, but it's a big deal if folks will be able to watch shows like "Game of Thrones" and "True Detective" next year without needing either a pay-TV subscription or an uncle willing to share his HBO Go password. Tesla Motors (TSLA) -- Loser Tesla may have been a market darling a week ago after unveiling bar-raising features for its Model S sedan, but this week it was a different story. The electric car maker was held back after an analyst suggested that the Model X crossover SUV could be delayed until the second half of next year. It wouldn't be a surprise to see a new car run into some roadblocks before hitting the market, and it could also explain why Tesla held last week's event to update its Model S sedan's options, as a way to buy itself some time. Another piece of bad news for Tesla came out of Michigan, where plans for it to open a dealership were shot down by legislation that prohibits an automaker from selling directly to consumers. Tesla's been battling this old way of thinking in many states, and sometimes it falls short. More from Rick Aristotle Munarriz