WITNESS PROTECTION: Questionable Advisor Practices Can No Longer Hide In The Shadows; Ex-Morgan Stanley Broker Censured

Over the past two decades several different structured products within the wealth management industry have tempted advisors to prove themselves gluttonous. High margin fees are the drug that can be difficult for certain advisors to resist. Now, Finra continues to claw back, at times, nearly a decade to right what they perceive as wrongs.  

“Ron Ray Willoughby, a 25-year industry veteran, agreed to a $5,000 fine and three-month suspension to settle the regulator’s allegation that he recommended 900 short-term UIT rollovers between July 2012 and December 2014, according to a letter of settlement published by Finra.”

 “A hypothetical investor who purchases a 24-month UIT and holds it to maturity would pay a sales charge of about 3.95%. Rolling over to a new UIT after six months would cost an additional 2.95%.”

“If the customer repeatedly rolled over the existing UIT into a new UIT every six months, he or she would have paid total sales charges of approximately 12.8% over a two-year period,” the letter of acceptance, waiver and consent said.”

Take a second and realize what Van Kampen and other UIT distributors, built into the fee structure noted above. Advisors were actually rewarded for bouncing around inside the ‘fund family’ before maturity. 

Nearly everyone reading this knows that bouncing around inside any mutual fund family doesn’t incur fees. For some reason UIT firms built-in monetary incentives for advisors to churn client accounts. 

Years ago this type of behavior may have been frowned upon but wasn’t formally punished via regulators. Especially at ‘downmarket’ firms that will go unnamed. 

**We do find it interesting that Morgan Stanley acquired Van Kampen and it’s UIT unit for its high levels of profitability, accompanied by this questionable behavior, yet they escape the wrath of Finra. Hmmm. 

The upshot of the story is this, Ron Ray Willoughby remains an advisor and registered with a $22b RIA based in Austin, TX, NFP Advisor Services. Or as some would conclude ‘broker witness protection’. 

 

Share this article

Email
Twitter
LinkedIn
Author picture

Curious about switching broker dealers? Secure your 2 best offers all while remaining 100% anonymous.

Ready to start? Click here.

Leave a Reply

Secure Multiple Offers All While Remaining 100% Anonymous

CONTACT US

It’s one of the most important—and personal—questions a financial advisor can ask. Whether it’s frustrations with admin fees, limited platform flexibility, or just a gut feeling that you’ve outgrown your current firm, the decision to move shouldn’t be rushed. The right time to leave isn’t just about market timing—it’s about life timing.

If you’re weighing your options, we recommend this quick read: The Best Time for a Move—a blog and podcast episode that walks through key signals it may be time to explore a transition.

There’s no one-size-fits-all answer. Going independent offers more control, higher payouts, and brand autonomy—but with added responsibilities. Wirehouses provide built-in infrastructure, brand recognition, and turnkey support—but often come with more restrictions and fees.

The real question is: Which model makes the most sense for your business goals and lifestyle?

To make a confident decision, you need to understand the economics behind both paths. Start by securing transition offers from top firms—independent and wirehouse—so you can compare side-by-side.

Get Your Offers in Hand

Our services are 100% free to financial advisors. We don’t charge you a dime. If you decide to make a move, the new firm pays us a finder’s fee—similar to a recruiter. But unlike recruiters, we’re not tied to any one firm, so we work to find your best fit, not theirs.

Want the full breakdown? Check out our blog post: How We Get Paid

© 2024 3xEquity, LLC. All rights reserved

Transition packages from top regional and national broker-dealers like LPL, Ameriprise, Wells Fargo, RBC, Cetera, Dynasty, UBS, and more.