Unless you happened to be an avid reader of Superman comic books during the 1960s, you probably don’t know what the “bizarro world” is. The best description I can give is that it’s a place where everything is sort of backwards. Superman was a disheveled hobo who engaged in criminal behavior like stealing valuable lumps of coal and using his super strength to squeeze them into worthless diamonds.
Imagine falling into a wormhole and finding yourself in a place where the Kardashians live intensely private lives, Steve Carell and Tina Fey are not funny, high school nerds are courted by the cheerleaders and brokerage firms don’t mind losing money so long as their customers come out ahead.
There are times, lately, when I feel like I must have fallen through that wormhole in my sleep. How else to explain how attorneys for the Financial Services Institute, SIFMA and various insurance sales organizations can argue, with a perfectly straight face, that people who call themselves financial professionals shouldn’t be required to provide advice only on behalf of the customer because, well, that would be bad for the customer?
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Sobering results from a light-hearted survey prompts columnist Bob Veres to change his tune about how advisers use "retainer."
February 7 -
That's just one solution among several that will help prepare your firm for success now and in the future, columnist Bob Veres says.
January 9 -
A handy guide for advisers, legislators and regulators to decode the jargon used to talk about issues important to the planning profession.
November 30
How can the SEC enforcement division see the bold brokerage firm advertisements about how their reps provide solid financial advice, and then somehow buy the argument that brokers shouldn’t have to register as RIAs and act as fiduciaries because
For that matter, how can Congress, just nine years removed from Wall Street very nearly bringing down the global economy (with the investment banking firms even more too-big-to-fail than they were back then) eagerly start dismantling the protections built into the Dodd-Frank Act? Or, with the stain of the Wells Fargo fake account scandal still fresh in everyone’s minds, how can they threaten to
If I am, indeed, trapped in the bizarro world, then maybe I need to just swing with it. Let me offer some suggestions.
One of the biggest conflicts of interest in the brokerage world is flash trading and other kinds of trading for their own accounts, where any dog stocks the company doesn’t feel comfortable owning is recommended by reps to their customers as “excellent investment opportunities.”
So let’s remove the restrictions and encourage wirehouses to do more of it.
When FINRA changed its name from the perfectly accurately descriptive “National Association of Securities Dealers” to the “Financial Industry Regulatory Authority,” many of us suspected that they had a pretty obvious agenda. The brokerage industry self-regulatory organization wanted to position itself as a regulator of everybody, including all fee-only fiduciaries, so it could impose a thousand paperwork-related obstacles to their business health and eventually put this silly idea of working for the customer to rest for good.
So let’s appoint a credulous new SEC chair who will enthusiastically get behind the push.
Brokerage firms have been caught lying about their interest rates in order to manipulate the LIBOR rate for their own profit, have engaged in unfair practices by charging for credit card-related services they never provided, facilitated drug and terrorist money laundering and created derivative investments they knew were going to fail, sold them to their customers and then bet against them for their own accounts.
So let’s remove all Wall Street regulations and appoint Wall Street executives to key decision-making posts in Washington.
Financial planners have gained market share by embracing a fiduciary relationship with clients and by acquiring the expertise to give professional advice.
So let’s replace the CFP curriculum with two weeks of cold-calling training.
If I am, indeed, trapped in the bizarro world, then maybe I need to just swing with it.
Meanwhile, professional advisers add considerable value by helping their clients avoid making emotional or impulsive investment decisions during periods of market trauma or euphoria.
So let’s all start following the advice of market timing gurus who bring to the table sketchy track records along with outlandish claims of being able to see into the future.
The Department of Labor fiduciary rule was six years in the making, after collecting many thousands of comments from all interested parties, and finally started the process of
So let’s tear it up and throw it away.
Many surveys, including a study commissioned by the SEC, have found that consumers are confused about whether brokers, fiduciary planners, dually registered reps or insurance agents are working in their best interests or just listening politely and then pulling their sales agenda out of a briefcase.
Instead of helping to make those distinctions clearer on behalf of the American public, let’s just throw in the regulatory towel and treat sales agents and fiduciary professionals equally, and call it “harmonization.”
The sales agenda and Wall Street revenue model seems to be enormously more profitable than the professional one, based on the bonus pools and enormous fancy headquarters buildings. This would seem to be an obvious clue as to which model is more beneficial to consumers.
So let’s create a political system where those who have the most lobbying dollars to spend, and the largest political contributions to give, are able to buy the opportunity to write the laws and regulations around financial services.
Meanwhile, closer to home, millions of young consumers are entering their earning years with no training in budgeting, investing and consumer finance, and would greatly benefit from advice from professionals who could help them avoid mistakes and get into great financial habits early in their lives.
So let’s lock them out of access to fiduciary planners by setting a policy of only working with people who meet minimum liquid portfolio sizes more often associated with an unusually successful pre-retiree.
The reader can decide for him or herself whether my bizarro recommendations are actually being followed, and accordingly whether you and I live in some so-called real universe or a bizarro alternate reality. Maybe we should probably be encouraged that some of these things aren’t happening yet. (The CFP Board, I have it on good authority, is not planning to institute cold calling training as a core part of the CFP curriculum.) But as I look at the decisions we’re making as a society, I find it hard not to see the glass as 90% empty at the moment, and the trend is clearly in the bizarro direction.
I’ve said this before: a small fiduciary core of advisers is trying to create a real profession out of financial advice, and I honestly can’t figure out why the winds are constantly blowing in their faces. Unlike all the self-interested lobbying we see in Washington, this small idealistic cohort is trying to bring about regulation and standards that will benefit their clients and all consumers.
In a rational world, people would ignore the Kardashians, banish all campaign contribution influences on Congress, require sales agents to disclose their agendas, protect the public with brief principles-based regulations rather than thousands of pages of rules, make financial planning advice available to all and be permanently suspicious of any organization that manufactures investments that it knows are destined to fail. In that happy place, lobbyists who argue on behalf of the general public and the general good would be heard more loudly and clearly than those who leave bags of money behind when they finish making their pitch.
I wish I lived in that world. Every night I pray for a wormhole to take me away from here to that better place.
