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LAFFER WARREN BROKERAGE OPENS; APPLIES SUPPLY-SIDE THEORY TO INVESTING

LAFFER WARREN BROKERAGE OPENS; APPLIES SUPPLY-SIDE THEORY TO INVESTING
 NORTH PALM BEACH, Fla., June 17 /PRNewswire/ -- A new stock brokerage firm opened today, bringing a fresh approach to the way investors work with financial advisors.
 Laffer Warren & Co., based in North Palm Beach, offers traditional brokerage services, but its emphasis will be on investment brokerage services to clients who pay an annual fee for investments handled by the firm. The firm is licensed as a broker-dealer and is a registered investment advisor.
 Owners of the firm include Arthur B. Laffer, the father of supply- side economics and principal author of the supply-side tax cuts of the Reagan Administration, and Roy G. Warren, a retail broker with experience with a national brokerage firm and as a principal at a regional firm.
 "Our structure applies the basic principles of supply-side economics to investing," said Warren, president of the firm. "We hope to eliminate a 'tax' that is associated with traditional broker-dealers and replace it with compensation based on value-added services."
 Laffer Warren will offer two types of brokerage account structures: transactional, commission-based, or fee-based services. A proprietary product, the Portfolio Management Account (PMA), encourages long-term account management practices by tying broker compensation to performance. Clients who choose the PMA structure pay an annual fee for brokerage services.
 Laffer expects that supply-side economics, applied to the brokerage business, will increase customer loyalty and re-establish trust with brokers.
 "Through most of the 1980s we saw tax reductions result in economic growth and the expansion of business activity," Laffer said. "People needed an incentive to take risk, and lower tax rates created that incentive. By applying supply-side theory to the brokerage business, we should encourage individuals to save more and invest for the long term."
 The PMA account structure removes the conflict of interest that has existed between brokers and their clients. That conflict is rooted in a system that compensates the broker for transactions, not for the quality of the investment advice.
 "The fee-based compensation system clearly places the financial advisor on the same side of the transaction as the client," Warren said. "This structure favors active short-term traders and long-term investors alike."
 Because Laffer Warren's PMA fees are based on the size of a client's portfolio, brokers have every incentive to handle accounts with an eye toward asset appreciation rather than generating transactions. In fact, clearing costs of making transactions are passed more along directly to the PMA client, removing any incentives to make trades. There are no transaction commissions paid to either the firm or its brokers.
 The company will offer a full range of financial products from equities, taxable and tax-exempt fixed-income investments to mutual funds and annuities. Additional investment banking services, including institutional investing and corporate finance, will be added using the same supply-side principles.
 Warren was a principal of Gulfstream Financial Associates, Boca Raton, a subsidiary of Kemper Financial Services from 1987 through 1990, and a vice president at Alex. Brown & Sons prior to forming Laffer Warren.
 Arthur B. Laffer is chairman of A.B. Laffer, V.A. Canto & Associates, an economic research and financial consulting firm. The Wall Street Journal Centennial Edition included Laffer in "A Gallery of the Greatest People Who Influenced Our Daily Business". He was the youngest of the 55 people featured. His supply-side economics theory was the driving force behind the Reagan tax cuts of 1981, which ushered in eight years of economic expansion.
 Laffer Warren & Co. is located at Three Golden Bear Plaza, 11780 U.S. Highway One, North Palm Beach, FL. The telephone number is 800- 622-4413. Additional offices are expected to be added in major Florida metropolitan markets over the next several years.
 -0- 6/17/92
 /CONTACT: Robert Kneeley of Robert Kneeley & Co., 305-493-8220, for Laffer Warren & Co. CO: Laffer Warren & Co. ST: Florida IN: FIN SU: PDT


JB-AW -- FL006 -- 1026 06/17/92 10:57 EDT
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Publication:PR Newswire
Date:Jun 17, 1992
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