1. 1 © 2007 ME™ - Your Money Education Resource™ Chapter 5: Attitudes of Clients Chapter 6: Financial Service Regulations Financial Planning

2. 2 Client Attitudes  What impacted your view of money?  Knowledge Impact of lack of knowledge on risk tolerance Who pays the bills?  Retirees  Younger individuals Risk tolerance???

3. 3 Financial Service Industry Regulations  Investment adviser Provide advice/analysis on securities In the business of doing this Receive compensation for advice/analysis Must meet all three tests

4. 4 Financial Service Industry Regulations  Investment adviser Exceptions  Banks  Lawyers, teachers, accountants, engineers If incidental  Brokers: executes purchases and sales of investment securities…not giving investment advice???? Do not have fiduciary obligation  Only suitability standard; much less legal exposure Merrill Lynch rule: SEC excepted brokers with discretionary authority who were compensated based on assets under management Courts: reversed Merrill Lynch rule in 2007  Less than 15 clients and don’t advertise being investment adviser

5. 5 Financial Service Industry Regulations  Investment adviser Must register with either  SEC More than $25 million ADV: registration statement filed with SEC Adviser has fiduciary obligation  State Less than $25 million In the business of doing this Receive compensation for advice/analysis Must meet all three tests

6. 6 Financial Service Industry Regulations  Investment adviser Brochure  Prior to providing advisory services  Annually to clients