When choosing a wealth advisory firm to partner with, there are a number of characteristics you should look for to ensure the firm is well equipped to address your unique needs, says Norman M. Boone, founder and president of Mosaic Financial Partners Inc.

“With so many firms out there, it can be difficult to identify the right one for you,” Boone says. “You should expect a lot from your wealth advisory firm, and knowing what to look for can help you make the right choice.”

Smart Business spoke with Boone about the keys to choosing a wealth advisory firm.

What are some key characteristics when seeking a wealth advisory firm?

Professional success is based on a firm caring about its clients, being sensitive to their needs and concerns, providing a high level of expertise and doing what it says it’s going to do. A wealth advisory firm should empower clients by providing them with financial education to help them feel more comfortable and allow them to make better-informed financial decisions.

You want a firm that is willing to commit to being a fiduciary — always putting the needs of its clients first. Independent firms are beholden only to their clients and have no other loyalties. How the firm is compensated is important. Fee-only firms are paid only for their advice and service. They avoid the potential conflicts of interest of receiving commissions, referral fees and the like.

Look for a firm that you trust and respect, and that trusts and respects you and your needs. The firm should aggressively honor the confidentiality of its clients. You should have a relationship with a team of people at the firm, not just one person, so you can benefit more from their collective expertise. Look for a firm that is large enough to bring the necessary resources to bear, yet is still small enough to remember that its members work for you.

Your wealth advisory firm should stay in the forefront of technology development to be equipped to meet your needs. It also should be committed to its employees, providing a good work environment and building the professional capabilities of staff with ongoing education and training.

How important is transparency?

Transparency creates the basis for trust. The firm and its members should be willing to answer any and all of your questions. In addition, objective, unbiased and personalized advice should be the foundation of every client relationship.

The firm also should offer a fully customized investment policy statement for every client providing a unique ‘road map’ for how that client’s money is to be managed. An investment process works best when it is disciplined, thoughtful, strategic, tax- and cost-sensitive, and well diversified. The investment world is constantly changing, and it’s important for a firm to stay ahead of the curve, choosing an independent course that reflects the best research and thinking of its members.

How should a firm tackle financial planning?

Financial advice shouldn’t just be about investments. Financial planning should be the underpinning of how the firm serves its clients. Financial planning is a lifelong process — as your circumstances change, plans should be updated. Good advice must be given within the context of your total circumstances and specific needs. When other expertise is required, it is the firm’s responsibility to recommend other professionals who are able to meet those needs.

Should a wealth advisory firm’s actions go beyond financial planning?

Your advisory firm should respect the importance and distinctiveness of the many pieces of your life, while embracing how those pieces fit together. The firm should answer your calls promptly and always be thinking about how they can serve you better.

Your financial adviser can and should be your partner — always sensitive to your particular needs and concerns while giving you the best advice for your circumstances in the framework of the current laws and world context. If you don’t trust them and look forward to receiving their advice, you may want to look for a different adviser.

Norman M. Boone is founder and president of Mosaic Financial Partners Inc. Reach him at (415) 788-1952 or norm@mosaicfp.com.

Social media: Stay up to date on financial news by visiting Mosaic Financial Partners Inc.’s Facebook page.

Insights Wealth Management & Finance is brought to you by Mosaic Financial Partners Inc.

Published in National

Dividends have accounted for 40 percent of total returns in the market since 1940. Some investors are concerned about recent stock price increases, but there still is room to invest in dividend-paying stocks, especially for the long term, says Sonia Mintun, vice president and portfolio manager at Ancora Advisors LLC.

“For the long term and at current valuations, particularly given historically low payout ratios, dividend-paying stocks can see strong relative and absolute performance. The outlook is enhanced by near all-time low U.S. Treasury yields and the Federal Reserve’s extended dovish position on interest rates,” she says.

Although the upcoming election and global economic environment are areas for concern, Mintun says an emphasis on high-quality dividend-paying stocks at low valuations should cushion investors from volatility and provide real returns over the long term.

Smart Business spoke with Mintun about the current stock market and how dividend-paying stocks remain a smart investment.

With the recent run-up in equities, is the dividend-paying strategy overvalued or a crowded trade?

Over the last year or more, the dividend theme has been the popular trade and the market has run up. There are a number of ways to evaluate if the market — and therefore dividend-paying stocks — is overvalued. You can examine whether it is trading at lower-than-average yields, or higher-than-average valuation ratios such as price-to-earnings (P/E), price-to-book (P/B) or price-to-cash flow.

The current market’s value is dependent on an investor’s time frame and risk tolerance. Is it overvalued for the next several months? It is possible we could see some pullback, but looking over the long term, it is our view that dividend stocks are not overvalued. The trailing P/E ratio of the S&P 500 index is around 14, which is lower than its historical norm and nowhere near where it was during the tech bubble when P/E ratios were closer to 50. While you can argue that the economic growth outlook is sluggish, companies have become operationally leaner, which has helped boost profit margins. They have better positioned their balance sheets by refinancing debt at extraordinarily low interest rates and have historically high cash levels. Lastly, with regard to dividend payers in particular, yields are at close to seven-year highs, while payout ratios are low, suggesting current yields are well supported by earnings. So overall, our opinion is that dividend-paying stocks remain attractive for long-term investors, especially in comparison to fixed-income yields.

What sectors have performed better and may be perceived as overvalued?

Defensive sectors such as consumer staples, health care and utilities have attracted a lot of capital and could be perceived as overvalued. Their P/E multiples compared to the overall market are trading at premiums to their five-year averages, but it is not a significant premium. Utilities, for example, are the most correlated sector, with 10-year treasury yields that have an 80 percent correlation since 1990. If you think that rates are going to stay low for some period, utilities may not be overvalued based upon the five-year averages.

What dividend-paying sectors have underperformed?

Economically sensitive stocks, such as energy, industrials and materials, have fared the worst, largely due to fears about slower growth in emerging markets and from concerns in Europe. However, many stocks in these sectors are trading at attractive discounts to their historical valuation ratios. They have ample cash on their books, generate consistent cash flows and could see improving profitability with higher commodity prices and demand if global stimulus takes hold.

What impact will the potential tax changes have on dividend-paying stocks?

A potential dividend tax increase has concerned some investors about owning dividend-yielding stocks. In 2001 and 2003, dividend tax cuts were put into place that reduced the dividend tax rate to 15 percent from 35 percent. These cuts are set to expire at the end of this year unless Congress extends them or passes new legislation. If no legislation is passed, taxes return to a top marginal rate of 39.6 percent. This tax increase may be a short-term negative for stocks and high-yielding stocks.

However, history has shown that tax increases do not have a long-term negative effect on dividend-paying stocks, as stocks typically recover after six months or so following an increase. This may be because an estimated 50 percent of equity held is owned by tax-exempt entities — such as qualified plans, foundations and foreign investors — all of which are somewhat indifferent on taxes. In addition, when tax increases are anticipated, it has typically not been problematic over the long term. For example, beginning in 2013, a new Medicare contribution tax of 3.5 percent will be imposed on investment income. This proposed tax increase has had minimal effect on the stock market so far.

What is the long-term outlook for dividend-paying stocks?

Longer-term dividend-paying stocks remain an attractive option for risk-averse, equity-oriented investors. Dividends provide a cushion during poor equity markets and are relatively stable over time. Consequently, by being less volatile and being more disciplined with capital because of the dividend policy, dividend-paying companies have outperformed non-dividend-paying companies for more than 80 years. Additionally, with dividend payout ratios near historical lows and weighty cash balances, companies may return more cash to shareholders in a low-growth environment. Given today’s low interest rates and continued global economic turbulence, we see dividend paying stocks as attractive now and for the long term.

Sonia Mintun is a vice president as well as an Investment Advisor Representative of Ancora Advisors LLC (an SEC Registered Investment Advisor). In addition, she is also a Registered Representative of Ancora Securities, Inc. (Member FINRA/SIPC).  Reach her at (216) 593-5066 or sonia@ancora.net.

Insights Wealth Management & Investments is brought to you by Ancora

Published in Cleveland

When choosing an investment adviser, many people are quick to hand over their money without asking questions. But failing to ask the right questions can lead to choosing an adviser whose philosophy doesn’t match yours and could cost you money, says Patrick Griffin, senior vice president, Lorain National Bank.

“Too often, the first question people ask an adviser is, ‘What should I buy?’” says Griffin. “What you should be asking is, ‘Who am I doing business with?’ This is the person to whom you are turning over your life savings. You have to ask the right questions to find the best person who fits your comfort level.”

Smart Business spoke with Griffin about the six Ps — profile, philosophy, people, process, performance and price — that can help you identify the right adviser for your needs.

When interviewing a prospective adviser, where do you start?

Start with the profile of the organization with which you are potentially going to do business. How much in assets is it responsible for? How many locations does it have? How many clients does the adviser have, and what other resources are available?

If you’re considering a jack of all trades, explore that person’s capabilities and the resources available for helping you with your portfolio. Also ask how many people are employed in the organization and what their roles are.

Finally, the single biggest question is how will your account be impacted if the person you are working with leaves the company? With a smaller organization, if that person leaves, all of that expertise goes out the door. A larger organization might offer greater continuity.

What does an investor need to know about a potential adviser’s philosophy?

This is the single most important thing investors fail to explore. Or if they do ask, the investment person responds, ‘My philosophy is to make you money.’ However, that’s a goal, not a philosophy. The bigger question is how are you going to make me money? Are you going to take risky positions and jeopardize my money? Are you gong to be ultraconservative and never meet my goals? Advisers should be able to clearly articulate their investment philosophy and how they operate their business.

It’s essential to find an adviser whose philosophy matches yours. If you are risk averse, an adviser who purchases gold is not a good fit. If you’re conservative, find a conservative adviser. If you like speculation, you need an ultra-aggressive investment firm.

What questions should an investor ask about people?

Ask about experience, education, professional designations and licenses. Then ask about structure. How are people’s responsibilities and efforts segregated? Is the person a jack of all trades, or is there a division of labor among selling, investing, researching and administration? Also, ask who you will be dealing with once the account is opened. Will it be the person who opened the account or someone else? How many other clients are they responsible for? If it’s hundreds, are you going to get the attention you need?

What is the next step?

The next step is process. Where is your money going to be invested? What is the process? Too often, advisers simply say you should buy X. But how do they know that if they don’t know what you need?

The first thing a professional should do is a needs assessment. Before recommending anything, that person needs to determine your requirements for liquidity, how much you have on hand, your time horizon, your tax situation and your expectations.

Next is an assessment of risk tolerance. What is your appetite for risk? Are you comfortable if your portfolio fluctuates? Are there any constraints on your investments? What will the asset allocation be? What are you going to invest in, and how much? How often will that allocation be rebalanced? Is the adviser going to buy the portfolio and forget it, or will your account be rebalanced so the original allocation remains consistent?

Finally, ask about the decision-making process. There are thousands of companies and mutual funds, so how will the adviser decide what to buy for your portfolio? And what are the criteria for selling?

What does an investor need to know about performance?

Look at the performance over time of the person managing your money and of the investments because, otherwise, you may be building on short-term anomalies that could send you in the wrong direction.

Second, how is performance communicated? By law, the adviser must send statements, but too many companies rely on that alone. Does the adviser meet with you about performance, or do you have to decipher the statement on your own? Will you receive additional information, such as how your portfolio has performed relative to the indices? If you lost 5 percent, but the market is down 20 percent, your adviser has done a good job of protecting your money.

How important is price?

The first thing people ask is what an adviser charges. Everyone gets paid, so if someone says there is no charge, it should be a red flag.

There are three ways to pay. With transactional fees, you pay every time you buy or sell. With asset-based fees, money managers charge a percentage of the value of the account. With advisory fees, the adviser gets a flat fee for advice but doesn’t do the actual investing.

Also ask about fees that you won’t see that may impact your account, such as withdrawal and redemption fees, fund expenses and bond commissions.

If you are handing over your life savings, you have to overcome the awkwardness of asking questions, because you won’t know something is wrong if you don’t ask.

Patrick Griffin is senior vice president at Lorain National Bank. Reach him at (440) 244-7119 or PGriffin@4lnb.com.

Published in Akron/Canton

Just when many investors were expecting the market to return to a steady growth cycle, they were caught off guard by an unexpected leap in market volatility, accompanied by a substantial decline in interest rates.

The dramatic swings in the marketplace seen over the last few months have been fueled by a variety of factors. The political system has been in turmoil as differing factions in Congress and the White House have gone toe to toe on whether to raise the debt ceiling. And, the recent first-ever downgrade of the United States government debt rating resulted in even more uncertainty for investors, says Thomas Schuller, CFP®, a vice president and financial consultant at Associated Investment Services Inc. Add to the mix a fear of defaults in Europe and a continued soft domestic economy with sustained unemployment numbers still near double digits, and investors seem to be running for the exits.

“In these difficult economic times, investors are looking for an opportunity to reduce market volatility and increase the yield of their individual portfolios,” says Schuller. “Market-linked CDs can be the answer to those concerns.”

Smart Business spoke with Schuller about how to determine if market-linked CDs are the right investment vehicle to help meet your financial goals.

What are market-linked CDs?

Market-linked CDs can offer a solution to help investors overcome the unexpected financial and investing hurdles they may currently face. The core characteristic of this unique solution is that it provides clients with a balance between risk and return.

These investments offer a guaranteed return of principal if held to maturity, and the potential for an attractive return above that of traditional CDs and fixed income products. The return is linked to the average performance from a basket of individual common stocks, subject to a capped maximum return.

Market-linked CD products have been experiencing a surge in demand across the country. Historically, investors have been advised to shift their allocation between stocks and bonds to find the proper asset mix. The typical investment advice is to increase bond exposure to reduce risk and increase the equity exposure to increase potential return. Adding a market-linked CD can help resolve these issues.

However, many clients feel like there is no safe place to turn. Current interest rate levels are not high enough to meet their goals, but the alternative of experiencing the value swings of the stock market is equally unappealing.

How do market-linked CDs work?

All bank-issued certificates of deposits provide clients with FDIC insurance and a guaranteed return of principal, if held to maturity. Market-linked CDs enjoy these same principal protection and FDIC insurance features. However, rates of return for market-linked CDs are linked to the average performance of an equity index, or a basket of individual stocks, subject to a capped maximum return.

For example, Associated Bank’s Power CDSM links its interest rate to the average performance of a basket of 10 individual common stocks that include recognizable companies such as 3M, Apple, DuPont, Kraft and Cisco. Market-linked CD offerings are priced monthly, with the capped maximum return finalized on each monthly issue date.

There is a risk that if the underlying basket of stocks does not generate a positive return, based on the conditions of each offering, that the client will receive a zero percent return, but the principal is always guaranteed if held to maturity. Market-linked CDs typically have a maturity range of five to six years.

It is important to also note that market-linked CDs typically have established minimum purchase levels that begin at $5,000 or even $10,000. And as with any investment, clients should always carefully read the term sheet and disclosure before determining whether this is the right product for their needs.

How can someone determine if this is the right solution for their investment needs?

If you are seeking a new solution to help provide a balance between risk and return, market-linked CDs may be an attractive addition to your portfolio. However, they do carry certain risks and may not be appropriate for those who do not have a long-term investment horizon, or for those who need guaranteed income to meet daily living expenses.

A specialist will be able to help you determine if this is the right investment vehicle for you needs.

The Associated Bank Power CD is issued by Associated Bank, N.A. (“AB”), Member FDIC, and is offered through Associated Investment Services, Inc. (“AIS”), Member FINRA and SIPC, d/b/a Associated Investment Services Group in Minnesota. AIS services the brokerage account in which your Associated Bank Power CD investment is held. These products may incur a significant loss of principal if sold or redeemed prior to maturity. AB and AIS are affiliates of Associated Banc-Corp.

Please see term sheet and disclosure for complete details prior to any purchase. This product involves a number of risks and may not be suitable for all clients. If you redeem the Power CD before maturity, you may lose principal. Contact your Associated Investment Services Inc. representative for more information, the current term sheet and disclosures.

Thomas Schuller, CFP® is a vice president and financial consultant with Associated Investment Services Inc. Reach him at (312) 565-4150 or Tom.Schuller@AssociatedBank.com.

Published in Chicago
Tuesday, 06 September 2011 14:58

Thinking about expanding your business?

Canada and the United States enjoy an economic partnership unique in the world, sharing one of the world’s largest and most comprehensive trading relationships. Growth in bilateral trade between Canada and the U.S. increased by almost 10 percent between 2009-2010. In 2010, total trade between the two countries exceeded C$502-billion, with C$1.38-billion worth of goods crossing the border every single day. For this reason, businesses looking for their first international foothold invariably look to Canada first.

While Canada is geographically proximate and closely tied to the U.S. by a common language and culture, there are distinctive legal, business and regulatory differences of which any business looking north of the border should be aware.


Tax considerations will drive the structure of virtually any expansion into Canada. If it is desired to consolidate the Canadian operating results with those of a U.S. parent for U.S. tax purposes, consideration may be given to using a fiscally transparent entity, such as an Alberta or Nova Scotia unlimited liability company, having regard for the anti-hybrid rules in Canada’s tax treaty with the U.S. Such entities are taxed in Canada in the same manner as any other Canadian corporation. It is also possible to carry on business in Canada through a branch of the U.S. parent. There may be Canadian withholding tax on cross-border payments of dividends, interest or royalties. Canada’s tax treaty with the U.S. contains certain exemptions from and reductions in Canadian withholding and other taxes that may be applicable in certain circumstances. Canadian transfer pricing rules require cross-border payments for goods and services to be made on arm’s-length terms.

Foreign investment review

Every acquisition of control of a Canadian business or the establishment of control of a new Canadian business by a non-Canadian is notifiable or reviewable under the Investment Canada Act. Generally speaking, an investment that is reviewable cannot be completed until the responsible federal minister has declared the investment likely to be of “net benefit to Canada.” A monetary threshold test applies to the determination of whether an investment is reviewable. A higher threshold applies to investments by non-Canadians that qualify as “World Trade Organization (WTO) investors” or to acquisitions from WTO investors that are not Canadians. This higher threshold does not apply to investments in the following sensitive areas: uranium production, transportation services, financial services and culture businesses.

Beyond the Investment Canada Act, there are Canadian ownership and licensing restrictions on businesses providing, among others, telecommunications, transportation and financial services. Canada has also identified certain culturally sensitive areas, such as publishing and broadcasting, that may be subject to ownership restrictions.

Corporate and securities laws

Canadian corporate legislation exists at both the federal and provincial levels while securities legislation only exists provincially. Mergers and acquisitions transactions are broadly similar to those in the U.S. Private transactions are effected as share or asset purchases while public transactions proceed as take-over bids (tender offers), amalgamations (mergers) or plans of arrangement (a court-supervised process more flexible than a merger).

International Trade

Canada is a member of the World Trade Organization and a party to the various WTO trade agreements. Canada and the U.S. are both parties to the North American Free Trade Agreement (NAFTA). Therefore, many of Canada’s customs and trade laws should be similar to those applicable in the U.S.

All goods imported into Canada are subject to Canada’s customs and sales tax laws. Issues such as tariff classification, valuation, origin, marking and labeling should be considered before commencing to ship goods to Canada. It is important to properly structure the Canadian business in order to minimize or eliminate customs duties and taxes whenever possible. Determining whether NAFTA rules of origin are satisfied (and supplying documentation if they are) will avoid potential civil liability for non-compliance with customs laws and manage customs costs.

As Canada’s Export and Import Permits Act imposes significant restrictions on the movement of goods into, around and out of Canada, it may impact the valuation of operations and strategic planning. However, virtually all domestic regulation in Canada is subject to NAFTA, and certain American parties may request review of an alleged violation by a NAFTA panel.


Mergers that exceed certain prescribed thresholds are subject to mandatory pre-merger notification under the Competition Act. These mergers cannot be completed until the parties have submitted their respective notifications and the mandatory waiting period has expired, been waived or terminated early. All mergers, regardless of whether they are subject to pre-merger notification, are subject to the substantive provisions of the Competition Act.

Intellectual Property

Canada’s patent eligibility is based on “first to file,” unlike its American “first to invent” counterpart. Novelty bars, the obviousness test and prosecution history all differ vastly from the U.S.

The importance of licenses is heightened in Canadian trademark law, which requires licenses even for wholly owned subsidiaries. Canada has not adopted the Nice International Classification System, which provides a distinct cost advantage. Registrants can also renew trademark registrations without proof of use.


Canadian privacy legislation requires informed consent to the collection, use and disclosure of personal information, instead of merely notice of those purposes as permitted in the U.S. Public as well as non-public personal information is covered by legislation, which applies to affiliated organizations and third parties. There are both provincial and federal privacy standards that apply to the collection, use and disclosure of personal information before, during and after a transaction.

Information Technology

Federal misleading advertising, provincial consumer and French language protection laws may apply when parties use the Internet for sales or advertisement purposes. Provincial sales taxes may apply to software licenses depending on the server and user locations. This may result in double tax if not structured strategically. Custom software use by an affiliate may result in loss of provincial sales tax exemptions.

Blake, Cassels & Graydon LLP (Blakes) is one of Canada’s leading business law firms with more than 550 lawyers in offices in Montréal, Ottawa, Toronto, Calgary, Vancouver, New York, Chicago, London, Bahrain, Beijing and associated offices in Al-Khobar and Shanghai.

John Kolada is the Chicago Office Managing Partner of Blake, Cassels & Graydon LLP. Reach him at (312) 739-3612 or john.kolada@blakes.com.

Stefan Timms is an Associate of Blake, Cassels & Graydon LLP. Reach him at (312) 739-3625 or stefan.timms@blakes.com.

Published in Akron/Canton

It has been touted as the most significant financial reform since Franklin D. Roosevelt’s New Deal.

The Dodd-Frank Wall Street Reform and Consumer Protection Act, created in response to the financial crisis of the last few years, was signed into law almost one year ago. While not all of its 387 rules have been adopted, the scope of reform will affect investment advisers, investors, business owners, management and the public for years to come.

According to Todd Crouthamel, a director, Audit & Accounting, and a member of the Investment Industry group at Kreischer Miller, Securities and Exchange Commission chairman Mary Schapiro said, “The purpose of the legislation is to create a more effective regulatory structure, fill regulatory gaps, bring greater public transparency and market accountability to the financial system, and give investors protections and input into corporate governance.”

“By the time it is fully adopted, the Dodd-Frank Act will impact virtually every aspect of our financial lives,” says Crouthamel. “The task is enormous, with 145 rules scheduled for adoption in the third and fourth quarters of 2011, plus 30 that are behind schedule.”

Smart Business spoke with Crouthamel about the impact of this legislation on private fund investors and investment advisers.

How will this legislation impact private fund investors?

The Dodd-Frank Act increases the net worth and investments under management requirements for an individual to qualify to invest in private funds. The rules exclude the value of an investor’s primary residence in determining net worth, and this will likely prohibit more investors from investing in private funds. SEC registration is also a significant issue. Many private fund advisers, who were previously not required to register with the SEC, will likely be required to register. This increased oversight may result in additional protections for the private fund investors; however, these protections will not be free. Private fund advisers are going to incur significantly more administrative costs in complying with the SEC requirements, and some of those costs may be passed along to investors.

What effect does the legislation have on SEC oversight of investment advisers?

The debate continues as to who should have regulatory oversight over registered investment advisers. The SEC is overburdened and the number of exams that it can complete is relatively small in relation to the number of advisers. As such, advisers with assets under management of $100 million or less are required to deregister with the SEC and to register with their state agencies.

The Dodd-Frank Act called for a study on enhancing adviser examinations. In January 2011, the SEC’s Division of Investment Management reported the results of its analysis and recommended that Congress consider one, or a combination of, three approaches to strengthen the SEC investment advisers’ examination program. First, it suggests authorizing the SEC to impose user fees on SEC-registered advisers to fund examinations. Second, it proposes authorizing one or more Self-Regulating Organizations to examine SEC-registered advisers. Finally, it recommends authorizing the Financial Industry Regulatory Authority to examine dual registrants for compliance under the Advisers Act. This could result in a political battle between the rules-based system by which broker/dealers are governed and the principles-based system governing registered advisers.

How does the Dodd-Frank legislation impact public company compensation disclosures?

In January 2011, the SEC adopted rules regarding shareholder approval of executive compensation and golden parachute compensation agreements. New rules also require additional disclosure and voting regarding golden parachute compensation agreements with certain executive officers in connection with merger transactions. All of these required votes under the new rules are nonbinding; differences between investors’ recommendations and actions taken by boards of directors could embarrass a company and lead to directors not being re-elected.

Finally, the proposed rules include provisions that require institutional advisers to report their say on pay votes. This provision has not yet been adopted, but it will certainly increase advisers’ administrative costs.

What widespread financial reform is also included in this legislation?

The Dodd-Frank Act extends to credit rating agencies, which were at the center of the recent financial crisis. As a result, Dodd-Frank includes provisions designed to improve the integrity of these credit ratings, including requiring many of the agencies to submit an annual report regarding their internal controls governing the implementation and adherence to procedures and methodologies for determining credit ratings.

There are also new whistleblower rules that provide increased incentives to individuals who voluntarily provide the SEC with original information about a securities law violation, which leads to successful enforcement by the SEC, with sanctions of greater than $1 million.

What can be expected going forward?

Because so much of the Dodd-Frank Act has not been finalized, it is difficult to determine what all of the final regulations will look like. For investment advisers, the challenge will be to stay current with new regulations and to ensure the firm’s policies and procedures reflect the new regulations. For investors, the challenge will be to decipher additional reporting requirements and follow who will ultimately be responsible for oversight of the investors’ advisers. Keeping a watchful eye over the coming months will be critical for advisers and investors alike to ensure they understand the latest developments and how they will be affected.

Todd Crouthamel is a director,  Audit & Accounting, and a member of the Investment Industry group at Kreischer Miller. Reach him at tcrouthamel@kmco.com or (215) 441-4600.

Published in Philadelphia