Tuesday’s Headlines: Brokers Outsource Fiduciary Duties to Advisory Firms

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As Washington wrangles over laws about providing advice to retirement plan participants, Morningstar, Wilshire and Mesirow Financial have come up with a stopgap measure: these advisory firms offer brokers and small-plan dealers services including menu design, fund selection and market commentary, Investment News reports.

Quoting Pension Resource Institute CEO Jason Roberts, Investment News says that “as a broker-dealer, if you want to keep your reps in the green zone so that they can cross-sell IRA rollovers, you'll want zero opportunity for the rep to have any input into the plan.”

It is estimated that this market of small 401(k) plans – as defined as under $10 million in assets – account for a whopping $750 billion market.

 

Other News:

Experts expect 2012 to be a good year for deal making. [DealBook]

Execs expect independent broker-dealers owned by insurance companies to continue to dwindle in size and importance over the coming decade. [Investment News]

As banks scale back lending in Europe, private equity firms are expected to offer more asset-backed financing. [Financial Times]

Fewer banks failed last year than in 2009 because they are surviving for longer periods in a weakened state. [WSJ]

Britain’s prime minister will curb executive pay in London’s financial industry. [Bloomberg]

Temasek, an investment firm run by the government of Singapore, created a new company to invest in private companies in northern Asia. [Businessweek]

Goldman’s private equity unit is selling the distribution company Alliance Films, with the Bank of Montreal handling the sale. [Financial Times]

A group of investors led by JPMorgan Chase will invest $340 million in two American wind farms. [Dow Jones]

Spain’s Banco Bilbao Vizcaya Argentaria laid off 29 employees in its Asian offices. [WSJ]

The British government completed its sale of bailed-out Northern Rock to Virgin Money. [Reuters]

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