Frequently Asked Questions
What is
Broker Village?
Can
individual investors use this site or your services?
What
issues do you address?
Why do
you audit prospectuses and online tools?
Shouldn't
a CPA firm do the math-theory auditing work?
What
tools do you offer?
What's
with the name Black Cat Decisions?
What's
with the name Broker Village and the tag line?
Who are
your clients?
When did
the company start?
Who runs
the company?
What is
your corporate mission?
What is
your philosophy?
What is
a calculator?
Why
would a advisor or executive use a calculator?
How much
do the calculators cost?
Are
there potential compliance issues?
Who
helps advisors if they need help?
How long
does it take to get up and running?
Will the
information be saved?
Do you
produce custom software applications?
What
does your gear and cog logo represent?
Can
individual investors use your tools?
Do you
capture client information?
Do you
capture fund company or security-specific info?
What is Broker Village?
Broker
Village is an analytics and consulting firm. It is a division of Black Cat
Decisions, our holding company. We create decision-making tools and offer consulting
services to the retail financial services industry. The tools help to analyze
a firm's pricing policies, its financial condition, an investor's planning
decisions, and a financial advisor's book of business. Should a B/D allow
legacy trades to be moved to wrap accounts, a financial advisor hire a
sales assistant, or a client refinance a mortgage? As better decisions are
made, profits and net worth may rise and liabilities may fall.
Our tools and services are for executives, advisors, and
investors (with an advisor). Some executive-level tools display account value,
total cost of ownership, and advisor pay. Others display assets, income,
and expenses. Advisor tools display assets and pay. Investor tools display
pre- and post-tax wealth. All tools can be customized and include
consulting services, sales material, training, and support. Results are
extremely accurate and often are audited by independent CPAs, an
independent?securities lawyer, a
CTO, and a CFA.
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Can individual investors use this site or your services?
Yes
and no. Our products and services are for financial service executives,
financial advisors, and regulators. If a firm that licenses our tools wants
to make them available to individual investors, it's OK with us. We will
not do so, however. Individual investors should not contact us because we
are not licensed to provide investment advice.
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What issues do you
address?
Tools for Compliance & Product Development Execs: Trade and Compliance
Analyzer, Share Class Calculator
?span
style='font:7.0pt "Times New Roman"'>
Model how various pricing
structures affect a fund's competitive profile
?span
style='font:7.0pt "Times New Roman"'>
Evaluate financial impact of
launching, closing, or re-pricing a fund
?span
style='font:7.0pt "Times New Roman"'>
Evaluate the potential for
liability by selling ?span class=SpellE>DoL-Friendly?shares
?span
style='font:7.0pt "Times New Roman"'>
Quantify?account value loss, and added cost, due
to clean and T-shares
?span
style='font:7.0pt "Times New Roman"'>
Evaluate the economic merits
of moving any client to an advisory account
?span
style='font:7.0pt "Times New Roman"'>
Evaluate the corporate
prudence of moving select clients to advisory accounts
?span
style='font:7.0pt "Times New Roman"'>
Evaluate conflicts of interest
at the point of sale and over time (and at other times)
?span
style='font:7.0pt "Times New Roman"'>
Equalize pay so that a client
is indifferent between any two shares
?span
style='font:7.0pt "Times New Roman"'>
Equalize pay so that a client
is indifferent between brokerage and advisory?
?span
style='font:7.0pt "Times New Roman"'>
Help investors choose the
proper share class and avoid undue fees
?span
style='font:7.0pt "Times New Roman"'>
Ensure that prospectus
suitability text is consistent with the math
?span
style='font:7.0pt "Times New Roman"'>
Identify more quickly issues
of reverse churning (and fix them)
?span
style='font:7.0pt "Times New Roman"'>
Identify a “prohibited
transaction?and assess if it actually makes sense to reverse
?span
style='font:7.0pt "Times New Roman"'>
Create far more accurate
prospectus expense examples
?span
style='font:7.0pt "Times New Roman"'>
Evaluate financial impact of
launching, closing, or re-pricing a fund
?span
style='font:7.0pt "Times New Roman"'>
Create competitive advisor
pay scales without conflicts of interest
?span
style='font:7.0pt "Times New Roman"'>
Create sales material more
quickly and accurately
Tools
for Sales & Finance Executives: Profitability
Analyzer, B/D Recruiting Tool
?span
style='font:7.0pt "Times New Roman"'>
Evaluate how a new sales
strategy affects revenue and expenses
?span
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Determine how changes in
product pricing affect revenue
?span
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Evaluate how market returns
affect pre- and post-tax income
?span
style='font:7.0pt "Times New Roman"'>
Determine how entering a new
market affects net income
?span
style='font:7.0pt "Times New Roman"'>
See how
differentials in B/D payouts affect recruiting efforts
?span
style='font:7.0pt "Times New Roman"'>
Create more competitive pay
packages to recruit advisors
Tools
for Advisors: Product Mix, Convert
Assets, & Lump Sum Calculators
?span
style='font:7.0pt "Times New Roman"'>
Move new or existing dollars
to fees
?span
style='font:7.0pt "Times New Roman"'>
Work the back of a book
?span
style='font:7.0pt "Times New Roman"'>
See how product fees affect assets
and pay
?span
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Hire a sales assistant
?span
style='font:7.0pt "Times New Roman"'>
Partner with another advisor
?span
style='font:7.0pt "Times New Roman"'>
Eliminate unproductive
accounts
?span
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Value a practice to buy or
sell
?span
style='font:7.0pt "Times New Roman"'>
Evaluate a recruitment offer
?span
style='font:7.0pt "Times New Roman"'>
Compare different annuity or
fund payouts
Tools for Investors: Mortgage Calculator,
College Savings Calculator
?span
style='font:7.0pt "Times New Roman"'>
Evaluate the threshold
refinance rate on a mortgage
?span
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Evaluate how income level
affects the merits of a refi
?span
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Compare refinancing savings
to the return on any investment
?span
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Evaluate net investment of
any college savings strategy
?span
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See how filing status affects
the merits of a college savings strategy
?span
style='font:7.0pt "Times New Roman"'>
Determine effect of a college
savings strategy on estate value
?span
style='font:7.0pt "Times New Roman"'>
Evaluate the effect of asset
allocation on account value
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Why do you audit prospectuses and online tools?
Load
fund prospectuses often contain math errors. Expense examples, share class
sales limits, and suitability text are particularly vulnerable. Call us to
discuss this issue or for a quick check of your firm's prospectuses. Due to
the extreme sensitivity of the issue, only a firm's senior executives
should call us. Our number is 203-259-6700.
We also
verify the accuracy of online tools and sales brochures. They cover
401(k)s, IRAs, RMDs, 529 plans, and mortgages. Commonly, returns and
expenses are improperly accrued, CDSCs are miscalculated, and textual
rationales are in error. In our opinion, most of them - particularly those
offered by fund firms and B/Ds - are in need of a serious review.
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Shouldn't a CPA firm do the math-theory auditing work?
No. In our
opinion, CPA firms are not well-suited for this type of intense
mathematical analysis. A CFA or math PhD - with a background in mutual fund
product development - is required. We have
two such folks on staff.
The issues
have nothing to do with a fund's audited financials, such as the income
statement, balance sheet, capital transactions, etc. Those important elements
are the rightful purview of CPAs and the big accounting firms. Discussions
of risk and how a fund operates also are extremely important. They are the
purview of the legal and compliance departments.
Then there is
hardcore mutual fund math. That’s us. Understanding the economics and
implications of their nuanced pricing profiles is required. Very few fund
and B/D executives have the requisite acumen. As a result, fee and
performance tables often are wrong. Suitability text is often misleading.
Textural discussions are often incomplete. Conflicts of interest
inadvertently are created.
To be very
granular, consider share class suitability. It can be a function of the
characteristics of the securities owned at the portfolio level.
Buying Cisco (CSCO) over Chevron (CVX) can affect which share is best for
investors. (It also affects firm revenue.)
If you are a
senior executive at a fund firm or B/D, do you know why? If not, call us to
discuss this issue or for a quick check of the suitability profile of a
share class or wrap account. Due to the extreme sensitivity of these
issues, only a firm's senior executives should call us. Our number is
203-259-6700.
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What tools do you offer?
There are at least ten. They run on the web or locally on a
computer. Web tools generally are written in JavaScript, C#, and/or HTML.
We offer several boutique tools that are written in EXCEL. Below are
descriptions of the main HTML tools.
1)
Trade and Compliance Analyzer
What is
the economic merit and corporate prudence of a trade?
This
risk assessment tool is for senior executives and financial advisors. It
can help a firm limit the potential for liability. With extreme accuracy,
it models fund and ETF trades in terms of account value, total cost of
ownership, and advisor pay. It handles traditional and ?span class=SpellE>DoL-friendly?
shares, and any mix of investor benefits like LOI, ROA, and free exchanges.
Results reflect fund- and account-level costs, like wrap fees.
Executives
can view trades through the eyes of investors, advisors, and regulators.
Quickly identify issues like conflicts of interest, reverse churning, and
prohibited transactions. As never before, you have the optics to see
problems and the tools to fix them. Use the Analyzer to set policies and
monitor advisors?compliance with firm-level guidance and procedures. This
tool helps satisfy SEC due diligence requirements and the DoL’s Impartial Conduct Standards. Results are audited. The
Federal Regulators License our Algorithms.
2) Share
Class Analyzer
How does
fund pricing affect suitability and firm revenue?
Displays
very accurate account values, fees, advisor pay, and revenue for any class
of a fund. Handles any investment, breakpoint, CDSC, return, expense ratio,
cost of capital, or B-A “flip.?Investors can pick the best share.
Financial advisors can evaluate their pay. CFOs can see how pricing affects
revenue. Compliance officers can spot conflicts-of-interest and create much
more accurate prospectus expense examples. Results are audited. The
Federal Regulators License our Algorithms and This Tool.
3)
Profitability Analyzer
How do
advisors' sales decisions affect firm profits?
Evaluates
the economic impact to a B/D of advisor decisions: move to fees, sell a
certain share class, sell insurance, etc. Displays assets, gross pay, net
pay, and GAAP-consistent financial statements. It handles almost any
product, number of advisors, payout, fee schedule, sales mix, and return.
4)
Convert Assets Calculator
Should an
advisor work the back-of-a-book?
Determines
impact of converting any part of the "back-of-a-book" assets to
fee- or load-based products. Handles any returns, payout, assets, valuation
factors, and most products. Displays assets, gross and net pay, and
practice value. For example, it evaluates converting 25% of such assets to
C-shares that pay 1%/yr.
5)
Product Mix Calculator
How does
a sales mix affect assets, pay, and practice value?
Evaluates
how changing a future sales mix affects assets and pay. Handles any
returns, fee schedule, payout, book of business, and most products.
Displays assets, gross and net pay. Practice value is derived from the
results. For example, it compares moving $5 million in sales from A-shares
to C-shares and annuities.
6)
Lump Sum Calculator
How do prices
and return affect assets and pay?
Evaluates
how a single trade affects assets and pay. A book of business is not
modeled. Advisor assets and pay are displayed for different sales mix,
pricing, or return scenarios. Compare, for example, an annuity paying 6%
and no trail to one paying 4% and a 0.5% trail. It handles any returns, fee
schedule, and most products.
7)
College Savings Calculator
What is
the best way to save for college?
Analyzes
almost any college savings strategy. Displays pre- and post-tax wealth, net
of state and federal tax! Handles almost any account type (529, UGMA, Roth,
ESA, annuity, etc.), underlying investment, contribution, return, fees,
income level, and tax rate. Results are audited.
8)
Mortgage Calculator
Should a
client refinance and how is a firm affected?
Compares
the savings of a mortgage refinance to the return on any investment. Often,
a refi is the best “investment.?Clients should refi for a far smaller
interest rate savings than they’d expect. Reinvested savings are modeled.
Handles almost any rate, term, reset, return, tax rate, CPI, and residency.
Results
are audited.
9+)
Other Tools:
Value My
Practice, Portfolio Analyzer, B/D Recruiting Analyzer, Partner Up, and
others.
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What's with the name Black Cat Decisions?
On the day the three founding families met to name the
company, we realized that we all had black cats as pets. (Is that a good
sign or a bad sign?) We wanted the word "decision" in the name.
That's because our software helped people make better decisions. Hence, the
name of our holding company was born: Black Cat Decisions.
Stu's cat,
Blackcomb (named after the ski mountain), was black cat number one. Mike
and Sandra's black cat was number two. Eric and Debbie's black cat was
number three.
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What's with the name Broker Village and the tag line?
Fittingly, a
high producing Prudential Securities Financial Advisor suggested the name.
Our name aptly conveys this sentiment: Full-service advisors (or
"brokers") help families in very meaningful ways. With an advisor
by their side, clients are more likely to achieve their financial goals:
retiring earlier, sending a child to the school of their choice, buying a
nicer house, increasing their wealth, protecting that wealth, or leaving
more to charity.
Our tag line
is "Broker Village: When the math matters." Applying solid math
to business issues allows firms and individuals to make better decisions.
Our math is very solid. Therefore, if an issue is of import, accuracy
matters, and our firm can help. As a friend of the firm once said: “Better
to be in command of the math than a victim of it.?/span>
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Who are your clients?
Clients
mainly are broker/dealers, federal regulators, and investment firms, like
mutual fund, annuity, insurance, and managed money firms. To a small degree
we work with law firms, CPA firms, and other entities. Most contracts
prohibit us from listing the names on our site. Our clients are brand name
Wall Street firms. Advisors are the ultimate users of about half of our
tools. In rare cases they purchase tools from us directly. Currently, our
tools and services are most popular with senior executives at B/Ds and
regulatory agencies.
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When did the company start?
Our holding
company, Black Cat Decisions, incorporated in June 2000.
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Who runs the company?
Nearly twenty
people associate with us on a full-time, part-time, or investment basis.
Several of us come out of senior positions on Wall Street. We are all
professionals with a lot of experience in our respective industries. Those
industries cover financial services, banking, consumer packaged goods, programming,
systems architecture, and consulting.
Decisions at Broker Village are made with the explicit understanding of
what it is like to be a financial advisor and/or travel in the field as a
wholesaler. In fact, several Management Committee members were advisors,
wholesalers, and/or senior executives on Wall Street. Several owners and
financial backers were, and are, successful money managers, on the mutual
fund, private investor, and hedge fund sides
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What is your corporate mission?
Our mission is to be the premier provider of decision-making
tools to the retail financial services industry. Our approach is to help
investment firms work more efficiently and objectively. Users of our tools
may be financial advisors, executives at fund firms and B/Ds, and federal
and state regulators. By using our tools, our clients should see an
increase in their sales and/or a reduction in the potential for liability.
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What is your philosophy?
Our
underlying philosophy is that financial executives, advisors, and investors
can make decisions that are more objective and, thus, more profitable. With
no easy way to evaluate the long-term results of a decision, they often do
what comes easy. As the calculators demonstrate, a small change can lead to
big results. For example, with a small change to their business model, pricing,
or sales mix, an advisor can easily increase their annual compensation by
25-50%. All they need is the "proof" to convince them to take the
required course of action.
With respect to full-service advisors, we totally support their efforts.
Moreover, the name Broker Village aptly conveys this sentiment:
full-service advisors help families in very meaningful ways. With an
advisor by their side, clients are more likely to achieve their financial
goals: retiring earlier, sending a child to the school of their choice,
buying a nicer house, increasing their wealth, protecting that wealth, or
leaving more to charity.
With respect to our advisor tools, we assume that advisors always
recommend the appropriate products and services to clients. Once determined
to be suitable, several pricing options may be available. A financial
advisor should know how their practice will be affected by the different
options. Several calculators provide that ability. Broker Village, and our
licensing firms, never suggest that an improper product or service be sold
to any client for any reason. Also, we assume that advisors ALWAYS effect
transactions that are in concert with state and federal regulatory guidance
and rules. A client’s best interests always should come first. Period.
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What is a Calculator?
Calculators
are unique software tools. Advisor tools display assets and pay for any
sales mix, returns, fee schedule, or payout. Investor tools show pre- and
post-tax wealth. Executive tools can compare current and proposed business
models. Results print, save, and display in graph and table form. These
customized tools include sales ideas, PowerPoints, training, and support.
Advisors can determine the effects of a decision before committing to a
course of action. With better decision-making abilities, their productivity
should improve. Firms can make better decisions about the products
they offer and markets they enter. Profitability could rise and the
potential for liabilities fall. Investors can make more confident and
objective decisions. Hopefully, that leads to more wealth.
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Why would an advisor or executive use a calculator?
The calculators make their life easier. They can model the
financial results of a business decision (like an advisor converting from
commissions to fees or a firm re-pricing a share class) before committing
to a particular course of action. Hence, an advisor's productivity (i.e.,
commissions) should increase as should a firm's revenue.
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How much do the calculators cost?
They are very
affordable and available only on a master license basis. A license allows a
fund firm or B/D to customize the calculators so they reflect their brand:
default values, sales ideas, logo, colors, fonts, etc. Generally, we do not
sell to individual advisors. To discuss a license, call us at 203-259-6700
or email info@brokervillage.com.
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Are there potential compliance issues?
Any firm that licenses a calculator should ensure that they
meet the requirements of their legal departments. Broker Village will make
any reasonable changes to the software, and to the associated marketing and
training material, to accommodate the legal needs of a client firm.
Our feeling is that the calculators are best used in conjunction with a
training module or educational presentation. By themselves, the calculators
do not convey the proper perspective. An advisor never should make an
investment recommendation to a client based solely on their compensation.
Hence, Broker Village strongly urges all client firms to make the
calculators part of an overall campaign that supports the efforts of
full-service advisors and helps them work with clients more effectively.
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Who helps advisors if they need help?
Once a firm licenses a calculator, they "own" it.
Thus, they are responsible for training and support of the financial
advisors if the tool is meant for advisors. In this regard, Broker Village
would prefer not to speak with advisors directly. Broker Village will
"train the trainer" at XYZ fund company or PDQ broker/dealer. It
is XYZ's or PDQ's responsibility to support the advisors that access the
calculators. However, if an XYZ or PDQ person has a question, they can call
or email us, especially if there is technology concern.
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How long does it take to get up and running?
It depends on the tool. Let’s
consider the new Trade and Compliance analyzer. You can go live almost
immediately with the BV-branded version. Your branded version and other
deliverables take a few weeks. One client went live one day after contract
approval. We provide onsite and online training to ensure that you’re fully
versed in how to use the tool.
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Will
the information be saved?
Yes
and no. Some tools have a save feature and others do not. For those that
do, while a session is live, information is saved. There is a save button,
but it must be clicked; nothing saves automatically. Further, some
calculators transfer information to other ones. For example, if you enter
$500,000 for Gross Commissions in the Convert Assets Calculator, when you
open the Product Mix Calculator, that $500,000 already is there. If you do
not click save, once you close out of the calculators, the information is
lost. Once the tools reopen, the default values appear, not your personal
entries.
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Do you produce custom software applications?
Yes
we can, but we usually don't. Please contact us at 203-259-6700 or email us
at info@brokervillage.com.
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What does your gear and cog logo represent?
Our
logo is a rendition of the mechanism that was a central component of the
very first calculators. Thus, it represents our product line: the
"Calculators."
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Can individual investors use your tools?
No and yes. Our products are for
financial advisors and financial service executives. If an advisor or firm
that licenses our tools wants to make them available to individual
investors, it's OK with us. We will not do so because we are not licensed
to provide investment advice. All risk and liability is on the shoulders of
the firm or investment advisor, not us.
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Do you capture client
information?
No. No client information of any
type is ever captured by our products.
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Do
you capture company specific info?
No. No
company-specific information is ever captured by Broker Village. For
example, if an advisor sells XYZ Funds, Broker Village never knows.
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