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This story on July 30 by Joyce Hanson of ThinkAdvisor was about the frustrations of one rep, David Sterling, of being unable to correct his information on BrightScope's site, particularly the posting of FINRA-related red marks, without having paid the $1,000 membership fee. BrightScope CEO Mike Alfred and some other members, including Michael Kitces, rigorously defended BrightScope's business model. One of four comments here was posted by Sterling.
Submitted by Robert Cochran — July 31
While all advisors should be aware of and work to have incorrect information from FINRA, SEC, etc. corrected, the truth is that BrightScope's information is not always what FINRA and the SEC actually show. We have had more than a few instances of these kinds of problems, and it seems to take an act of God to have them corrected by BrightScope. While I would like to believe that corrections would be made much faster if we were paying $1,000 per month, which we are not, my hunch is that our requests are put at the bottom of the pile, behind the folks who ARE paying. And just who ARE paying? A quick look tells me that, for the most part, they are wirehouse and large broker/dealer firms. Since there are many folks from each office, perhaps their firm is paying the fee to get them registered with BrightScope, perhaps not. But there were hardly any fee-only advisors who are paying members in our geographic area the last time we checked. Perhaps the big BDs are using this as a somewhat-free advertising opportunity, so that their commission reps can post articles and answer questions? Add to this the fact that none of these people is likely to have their own web site.
We have chosen to not participate because of the above demographics, because of still incorrect information related to our office and advisors, and because we have chosen to target our marketing dollars in a more effective manner.
Yes, there may be instances where someone in our target market might check out BrightScope, and we may lose because our information there is outdated or simply incorrect, despite having done everything we could to clear up the errors. Is it worth $12,000 per year to participate? The jury is clearly still out.
Submitted by David Sterling—July 31
Re: Authenticity
Let's get right to it. I am always humored by comments that can only be based on speculation and/or motivated by the "pitch." For example, Mr. Kitces comments; "Nobody had ever noticed that David Sterling had a regulatory infraction, not even David Sterling, until he saw it on BrightScope." Mr. Kitces is incorrect about my prior knowledge, which I find troubling.
The nature of the falsehood is at the least a careless assumption. If one has knowledge about the securities industry, this individual would know that it is very difficult for registered representative to avoid notice or awareness of such a "mark." However, there is more to it.
I consider the statement to be somewhat arrogant and a misrepresentation of BrightScope's value proposition. Of course, I understand that "all bets are off" when the "bottom line and promotion" are in play. Moving along.
Referring to my "regulatory red mark" earned for a contractor's dispute that was settled for nominal value, Mr. Kitces offers this sage advice. If his complaint is that FINRA's Broker Check shows an infraction that he doesn't like, he should take up with the regulator."
I dare say that many would agree that this is "much easier" said than done. Words do come easy. However, I cannot help but be intrigued by another possible lurking consideration. This may or may not fall under the category of creative "lawyering."
BrightScope is a private company that is using a public access channel to report on information that has been filtered through a securities industry sanctioned process. What I find intriguing in this "age of fast and furious" digitized posting of research information is the accountability that should attach to those firms which demonstrate an inclination to reconfigure otherwise regulatory sanctioned information to create an impression or representation, which could have ramifications for someone's livelihood. If I am not mistaken, Mr. Cochran (below) had something to say about accuracy.
Finally, I suppose I should be grateful for BrightScope's presence because its disclosure of my "record" will force me to have a discussion with my client regarding those matters of concern to me. It just keeps getting better when there those who can look out for everyone's well-being from saddles much too high for them to reach without an "ego" boost. More to likely follow as I currently fear looking back on earlier pages without losing perspective and these comments. David F. Sterling, Esq., Consultant
Submitted by Robert Cochran—Aug. 1
While I am aware that some investors search for RIAs based on historical performance, there are many fee-only RIAs who are not a fit for that client. Number one, those RIAs usually do not advertise historical performance. Number two, higher-end RIAs tend to use more customized portfolios, thus eliminating historical performance numbers. And number three (and perhaps most important), RIAs who are truly wealth managers often do not want clients who are focused only on comparing investment returns. These clients inevitably chase performance without regard to the risk and returns they actually need to take to achieve their lifetime goals.
So how will BrightScope handle this issue? I would hope they realize the disclosures required to publish historical performance data will make it extremely arduous at best, most likely impossible.
I am all for transparency and full disclosure. Let's all agree that is a goal. But accuracy in reporting information should also be high priority. My experience is that getting data errors and wrong items fixed at BrightScope is not easily done, even when the error is not from their information sources. But, again for us, at this point it is heavily dominated by wirehouse and other broker-dealer companies. We target people who are searching for a truly independent RIA firm, so our marketing dollars need to be focused somewhere else.
Submitted by Simon Napper—Aug. 1
CFP's Goldfarb Case Illustrates Need for Clear Compliance Lines
