An advisor, finally unshackled from what he criticized as onerous rules around social media, found himself slammed when he exercised his newfound freedom.
Gerber Kawasaki Wealth and Investment Management CEO Ross Gerber left LPL Financial in December, frustrated by onerous compliance rules around press appearances and FINRA mandates on posts.
Then last week, Gerber, who
“If you are hosting or attending the Trump fundraiser in L.A. we will identify who you are to the media and public. We will boycott your business," Gerber tweeted March 11, adding that “Trump is the devil.” A subsequent tweet urged his followers to “get everyone out on the streets and stop his motorcade.”
The firm’s ratings on Google have turned into a mixture of glowing reviews and scathing ones following Cernovich’s post. “This man called people scumbags for their political beliefs, and said he would destroy them for supporting the POTUS,” one commenter wrote. “This guy will never see my money.”
The episode illustrates the risk when advisors post on social media, Gerber says. The Santa Monica, California-based advisor had severed his ties with LPL under his firm’s new dual structure, in part because of how he sees independent broker-dealers such as LPL as tasked with enforcing FINRA’s overly vague regulations.
Gerber set up a fully independent RIA and a hybrid firm under LPL, he says. By his account, LPL’s strict oversight of press interviews and social media posts was hindering the firm’s growth, and the two-way approach allows the firm’s 19 advisors to choose between the two affiliations.
Hybrid RIAs account for
LPL’s approach to Gerber’s frequent media interviews and social posts changed
“They come in and tell me how I’m supposed to market my business because I sell a few 529 plans through them?” he says. “The broker-dealers need to adapt, and they’re not able to because of FINRA. I like LPL but I don’t like the fact that their compliance department felt compelled to be draconian with the rules after five years of giving me a pass.”
Among recent career changes, Merrill Lynch lost brokers managing $2.2 billion to rival J.P. Morgan Securities.
LPL spokesman Jeff Mochal says no policies about advisors’ compliance obligations or responsibilities changed when
“We’re proud to partner with our advisors on solutions that help advance their marketing and social media efforts, while also ensuring compliance to practical regulations designed to protect investors from potentially incomplete or misleading marketing,” Mochal said in an email. “It’s a unique challenge on platforms like Twitter, but thousands of LPL advisors are on that platform daily without issue.”
A spokeswoman from FINRA declined to respond to Gerber’s view, referring questions to
“Social media may be a new medium, but FINRA's rules on communicating with the public are still applicable,” according to the website.
Gerber and Danilo Kawasaki, the owners of the firm, launched the RIA in 2010. At the end of 2017, the practice opened a satellite office at a WeWork location in San Francisco with an eye toward opening more in the future, Gerber says. He dropped LPL on Dec. 22 after five years, according to FINRA BrokerCheck.
In the March 12
“I received no reply to an email asking whether or not an animus towards Trump supporters is a material fact that should be disclosed to existing Gerber Kawasaki clients and the investing public,” Cernovich wrote in the post.
No clients have called Gerber about his tweets and the response to them, he says. Gerber refers to himself as a “prominent Democrat,” but he says that calls from Cernovich’s readers and alt-right bots died off day or so after the post.
“You’ve got to be careful what you say on Twitter,” Gerber says. “It was my fault. I’m a political guy, and I was too aggressive and they attacked back.”
LPL’s compliance team never restricted him from stating political views, but they did instruct him to be careful not to be construed as recommending particular products, according to Gerber. He points out that advisors who are fiduciaries don’t receive commissions for selling products in the first place.
Previously, Gerber says, LPL had taken more of a hands-off approach towards his media appearances and social media as a representative of his RIA rather than LPL. He predicts most of his firm’s advisors will join the independent RIA in an effort to boost business through unfettered posts and appearances.
“There’s no need to have a broker-dealer anymore. That’s really what it came down to,” says Gerber. “They didn’t want us to post anything on social media and I was like, ‘Dude, that’s not how it works.’”
