Aurora-based financial industry association to rank advisers - Denver Business Journal:

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A new nonprofit organization, the Aurora-based National Association of Boar Certified AdvisoryPractices (NABCAP), aims to fill that gap. NABCAP’sx website, at http://www.nabcap.org, was scheduled to go live on Thursday. The organizationj currently hasfive employees, and plans to hire betweejn 10 and 25 additionak people over the next six to 12 monthxs as it ramps up its effort to revieww and rate most of the nation’s roughly 400,0090 active licensed investment advisers. The goal is to identify best-qualitg practices and rate advisers baser on how well theyperformn them. “We want to empower the investintg public,” said Schwartz, NABCAP’s founder and president.
“If you look at how advisor y practices are reviewed and there are many companies outtherwe [doing this]. They all are for-profit and they look at things from aperspectiv that’s different from the public’s, in our opinion.” NABCAP hopesz to publish the information this fall on its websitre and in as-yet-undetermined national and local publications; the reviewx will be updated on an ongoingf basis. Each advisory practice will be rated in 20differenr categories, including investment and risk philosophy, team years of experience, credentials and percentage of alternative investments, fee and cost structure and customet service, Schwartz said.
Reviewers will verify information provided by the including interviewing team memberzs andcontacting clients. Advisory practices will be chargexd $245 to participate. Some of the factors oftenj weighed byother reviewers, includint a firm’s revenue and assetsd under management, are irrelevant to the average investor’s and NABCAP won’t consider Average return on investment is another area NABCAPo steers away from, because it’s too difficulft to evaluate returns on diversed portfolios, or to differentiate between assets held by the advise r and external assets held by the investor but on which the advisert may provide guidance.
Instead, NABCAP will focusa on factors that directlyuaffect clients, such as the numbe r of investors handled by each adviser. “The industr average is around 400 clients per Schwartz said. “The wirehouses will say they’re closee to 250 per adviser ... Mathematically, it’ss impossible to work an eight-hour day, 10-houd day, even 12-hour day, and take care of those If they’re already at 250 per the only way you want to become theitr next client isif [youdr net worth puts you] in the top 20 percenft of their clients, because you know they’re going to take care of thosr people.
” NABCAP has been in the planning and developmentr stage for 3-1/2 years, long before the 2008 market But the recent recession and last year’sa market losses underscore the need for an unbiase d resource that serves the investing public, not the investmenty industry, Schwartz said. “Investors consistentlyh get burned everytime there’s a poor cycle or correctionb in the market, or what we’re going through righ t now, a massive recession,” Schwartzs said. “The numbers are just staggering, how poorlu investors performedlast year.
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