DOL Pulls Fiduciary Rule Proposal

[Stephen Winks]

DOL Pulls Fiduciary Rule Proposal


This assures everyone is heard and in no way suggests that a lesser obligation to act in the consumer's best interest will prevail when it comes to retirement accounts to include IRAs governed by ERISA.



The industry would naturally prefer to have no accountability for broker and insurance agent recommendations as is presently the case. Cost and transparency are not even considerations for brokers under a suitability standard. Under ERISA and the traditional understanding of fiduciary duty advisers are responsible for their recommendations and the adviser must act on behalf of the consumer in the consumer's best interest entailing significant ongoing fiduciary duties on every recommendation the adviser has made. This is literally the meaning of "continuoius comprehensive counsel" required for fiduciary standing.



Presently there is no ongoing responsibility of loyalty and care required of brokers once they have been paid for executing a transaction.



Dale Brown's question, "What is the problem we are solving for?" is the right question, but he will not be happy with the answer.



The problem is the loss of trust and confidence of the investing public because the broker is not accountable for their recommendations and has no ongoing responsibility of loyalty and care for the consumer necessary for the broker to act in the consumer's best interest. What this means is brokers do not render or imply any advice is provided, they just make consumers aware of their investment alternatives--making it impossible for the broker to add value. The industry says it is up to the consumer to determine investment merit on their own, regardkless how limited the investment knopwledge and experience of the consumer may be. If there are client disputes, they are handled through preordained and confidential arbitration proceedings which start with the premise that brokers do not render advice. To add insult to injury, the three arbiters must be agreed to by both parties, with one of the three representing the industry's best interests. Thus, only fraud and criminal activity but not poor advice are really material considerations. Under a fiduciary standard, the responsibilities and liability of brokers are much more specific and entail specific ongoing fiduciary duties brokers have not been held to but are required under a universal fiduciary standard called for under Dodd-Frank and presently required under ERISA.



Bill Dwyer is correct there should be one fiduciary standard--the one based on statute, case law, regulatory opinion letters and 800 years of common law. One fiduciary standard, probably not the one of his liking based on the tradition understanding of fiduciary duty would provide the consistency and transparency he seeks.



The problem Dale Brown cites is the lack of ACCOUNTABILITY and RESPONSIBILITY of the broker to literally act in the consumers best interest as required under objective, non-negotiable fiduciary criteria of statute, case law and regulatory opinion letters.



The industry would like to continue to be neither accountable nor responsible for acting in the consumer's best interest which is a requirement for all good public policy. It is obvious, the industry is putting its self interest ahead of the best interest of the consumer. This extended comment period will make that very clear.



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[Bradly T.]

I believe Mr. Dodd and Mr. Frank have exactly the same opinion as Mr. Brown. And the historically demonstrated outcomes for 401k ERISA "protected" participant outcomes is the most shameful and worst of all demographics measured for any investor group or class. Low and middle income plan participants do NOT receive ANY form of professional "advice" or education....they get an often inferior and redundant selection of very limited market-spectrum funds where allocation is left to the participant. Managed account clients generally receive far better fund selection and monitoring and reporting services than ERISA plan participants do.....or ever will.....of course you need several hundred thousand dollars to meet the RIA minimums for their service. The concern that small account holders cannot find custodians or advisors for IRA balances which currently average under $28,000 per account nationally is not invalid or misplaced simply because you say it is. Even the DIY custodians will not allow IRAs for anyone which makes the custodian liable for the acts of the account/IRA owner. The concern should be that ERISA has had a horrible result so the DOL has proven themselves incompetent to establish rules which ACTUALLY protect anyone or serve the interests of those they are supposed to serve. Rewarding such a historical failure by increasing their influence further is the height of insanity. Naturally, you'd be a big fan of that. ERISA is a total failure thanks to the DOL. The harmonization of standards or increasing standards for reps and BDs would be a far better tactic than giving the DOL control of IRAs. Even nothing would be better than that for the average IRA owner.

[Stephen Winks]

Bradley T,


To dumb down advice is not the solution.



A much ligher level of advice is required which is totally consistant with the traditional understanding of fiduciary duty. The necessary enabling resources which would make the acknowledgement of fiduciary standing safe and easy to execute and manage is well understood. The economics of advisory services generates higher earnings, margins, three times the multiple and provides a preemptive advisor value proposition relative to commission sales.



Morgan Stanley Smith Barney is cracking the code on comprehensive performance reporting which makes possible an asset/liability study and continuous comprehensive counsel required for fiduciary standing. This is a massive first step in the creation of an expert prudent process (asset/liability study, investment policy, portfolio construction, monitoring and management) authenticated by statutory documentation confirmed by expert opinion letters which makes advice both safe and a far more profitable business model to commission sales.



In a free market, there has never been a case where the consumer's best interests has not prevailed. It is good business. MSSB intends to double advisory assets to $1 trillion over the next five years.



If they are the first to provide an authenticated audited prudent investment process they will easily exceed a trillion.



Bradley T, you are argueing for a business model which will not exist in ten years because every consumer wants their best interests to be served--something you have long opposed. The innovation you deem a myth is about to make you an anachronism.



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[Bradly T.]

I've been called worse than old fashioned....thanks. There you go again. Stating falsehood as fact again.....the opposite of your claim is far more true - there are no or few examples where the consumer's best interest has ever prevailed....and where it has was the result of free market competition and NOT due to government regulations, regardless of how well intended they may have been. You claim less competition and constrained/limited "free" markets are superior and further claim or presume that regulation delivers desired results. Please provide three examples in any time frame where capitalism defers to the buyer's interest over its own. When something is profitable, it happens. Until then it doesn't....or it happens badly with significant unintended consequences.


I'm argueing for a business model that did not exist 10 years ago....and is, by far, the fastest growing, free market evolving model. Change is coming to be sure....but not your Winks, never yours.

[Stephen Winks]

Bradley T,


As usual, you make no sense. A free market is about as open and free for competition as one can get. That is why you are being outdated with a less expensive far better advisor value proposition.



You are choosing to be "old fashioned" and are fighting to your last breath to do so.



You can not phathom doing things any differently than they way you are doing them today, even when it is in the best interest of the consumer, your professional standing is greatly elevated and you make more money.



Can't teach an old dog new tricks.



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[Bradly T.]

Actually, I do EVERYTHING differently today than 10 years ago.....except applying MPT to strategic allocations and utilyzing financial planning for every client engagement.....only those remain constants in my practice. I'm still evolving thanks. And since I offer both platforms (and you offer none to anyone), my opinion about what best serves client interests and costs is far more relevant than yours sir. I embrace choice, access, and competition. You're the one who wants to reduce all choice and competition by outlawing all but the 40s Act platform with current minimums in excess of $250k (and rising) while the average IRA balance is under $30k and the average 401k is under $80k. Only your elitism is greater than your love of monopoly. Let free markets rule the outcome.....if you dare. Since I work both sides, why would I care?

[Stephen Winks]

Bradley T,


There is absolutely no limitation in choice being advanced by me, I am just advancing a better and less expensive choice which is more profitable as a business.



I understand it is not in your self interest to be accountable for your recommendations or for you to fulfill your duty of loyalty and care to your clients in their best interest which entails fiduciary standing. Acting in your clients best interests is not possible as long as your fiduciary duty is to your insurance company/agency, not the consumer.



If the consumer has a choice between you acting in your best interest rather than theirs, guess what the consumer chooses? Choice is a false arguement--easily refuted.



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[Bradly T.]

So far, by 3 to 1, my clients are choosing breakpoint commissions rather than perpetual fees with full understanding of the differences in their CHOICE (and many choose both - imagine that, folks can do BOTH rather than all one or all the other). There are plusses and minuses within every choice Mr. Winks. Your choice is not without limitations, costs, or risks. Nothing is. The dual indie channel is evolutionary and progressive Winks, we are changing many aspects within our industry (please note both words - within, and our - you're an outsider trying mightily to influence those whom you criticize but are not a member of) and it is this channel with a future of true independence for the greatest spectrum of clients, products, and services. My clients believe I do care about and work diligently for their financial benefit and well being and they understand how I get paid and what it costs them to do business with me regardless of the product or service provided. Imagine that - applying expertise ethically regardless of regulatory requirement; why? Because it is what keeps my firm in business and adding new clients by the referrals of existing clients with a network of other professionals who recommend clients to us because of our prudent professional process and results over time. But you think such a model is fiction, a rediculous lie because only those who must do the right thing will do the right thing and they will always do the right thing because they must. Rather silly position really.

[Lucullus]

Right on, Bradley.

Many of us have clients who have chosen to pay commissions rather than fees, when ALL INFORMATION ON BOTH CHOICES IS DISCLOSED. It's quite common in the "dually registered" community as you know. As is FULL disclosure - including, but not limited to, details of compensation. You will not convince Mr. Winks of that fact because his whole perspective denies the possibility of commissioned advisors putting the clients' interest first, making full disclosure, etc. His postings remind me of the testimony of "Matthew Harrison Brady" (brilliantly played by Frederick March) in "Inherit the Wind".

Mr. Winks' "logic" consists of False Dichotomies, False Attributions, "Excluded middle" arguments, Non Sequitur, Arguments from Authority, and a constant overlay of Ad Hominem. A high school debating student would be ashamed of using such "reasoning". Mr. Winks clearly is not. That may be because he is incapable of distinguishing between the nonsense he spouts and valid and sound argumentation. Or it may be that he is able to do that, but believes that readers of this forum are not.

- John

[Bob H]

Insanity: doing the same thing over and over again and expecting different results.
Albert Einstein

[Bradly T.]

True enough. And yet, the actual results of this "insanity" loop are quite impressive from where we started over two years ago. The DOL has been brought to heel. The SEC must now prove both the need and the cost of harmonization. Financial planning is NOT an element of investment advice or Dodd/Frank (thanks anyway Noncoalition), and there is far more focus on hifrq/quant trading, deriviatives, capital requirements, etc., as is appropriate given their collective influence on markets and systemic risks. It has always been apparent that retail distribution had nothing to do with the collapse and the political/financial opportunism of many voices regarding retail have only been a diversion away from far more critical issues. So, yes it would be insane to argue with Mr. Winks....however, that arguement either predicted or influenced a GREAT outcome for retail. And also resulted in far greater scrutiny of the only retail element guilty of much - RIAs with custody and discretion (breeding ground for Ponzi's and the snake oil crowd). RIAs without custody are no more guilty or responsible than regreps for the collapse or the fix of the collapse. Time to get focused, on target, on mission - find and convict criminals and frauds. Period. Let's see DC do that well for awhile before giving them more tax dollars and authority.


I am reminded of a saying by Mr. Clements - "Nine out of ten of the worst things that ever happened to me.....never did happen!" It appears the dual indie channel survived to continue its new leadership role in shaping distribution as a third party, objective process, distinct from product creation and inventory/quota sales and captive/proprietary distribution. A good thing for practitioners and our clients.

[Stephen Winks]

BradleyT and John Olsen aka Lucullus,


You have offered your clients a false choice.



Break point commissions make sense if all you are doing is selling a product. You have no accoutability for your recommendations. You have no ongoing responsibility of care and loyalty to the client requiring you to act in the client's best interest in fulfilling significant ongoing fiduciary duties based objective non-negotiable fiduciary criteria of statute, case law and regulatory opinion letters.



You are comparing a one time transaction performed by a salesman to the ongoing duties of an adviser who is responsible for every recommendation they have ever made incorporating all the client's holdings.



Two different businesses, you are not accountable or responsible as a salesman, the adviser is.



100% of your clients prefer that their best interest be served. Your enterprising competitors will make that clear.



Importantly, modern portfolio construction is actually cheaper than discounted commissions and afford a far superior advisor value proposition.



Indeed as " Bob H " cites Einstein above, Insanity is doing the same thing over and over again and expecting a different result.



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[Bradly T.]

Perhaps it was Will Rogers I am quoting......it's easy to mis-attribute the sayings of Jesus, The Buddha, The Bard, Franklin, Payne, Clements, and Rogers.....all had superior wit and wisdom for the ages. Love to hear Will's take on the current Congress....he didn't think much of any during his day either. But to Bob's point......victory is to be savored.....at least by the victor!! Sorry Winks - you're wrong and you lose....both.


But you evidently have "new" models to promote and champion. Your support of Merril Lynch and MSDW seem misplaced but hey - they need your help evidently. Apparently they are your new cause and industry leaders......and have the highest minimums in the business today. Elitism with a wirehouse twist. Go get 'em Winks. Promote wirehouses as industry leaders!! Geeeeezzzzz. Financial planners, dualies, and indie BDs have survived your nonsense. That's all I care about....for now.

[Stephen Winks]

Bradley T,


The DOL has not been brought to heel. They very wisely are affording those that oppose brokers being held to the fiduciary standard of care to state their arguements. There is not one arguement advanced by obsttructionist which is not easily refuted--which will be clear to everyone when the dust settles. More importantly, advisory programs where brokers retain descretion (rep as advisor, rep as portfolio manager) where large firms like Wells Fargo Securities acknowledge the fidiciary status of the broker will go from 42% of indistry revenues in 2011 to 50% in 2013. This means the industry has achieved a tipping point where more revenues are derived from fee based advisory services than commission sales. Thus it is immaterial what the SEC or the DOL do--the industry, in a free market, has in fact evolved from commission brokerage to advisory services in the best interest of the consumer.



There is not one arguement that can be advanced by opponents to brokers being held to the fiduciary standard of care that can not be easily refuted.



In the history of man there is not one case where the consumer's best interest has not revailed in a free market. Cerulli documents that by 2013 it is inevitable that the consumer's best interest will prevail yet again, this time in the financial services industry.



It is time to awaken to the new reality of the free market and wise public policy that protects the trust and confidence of the investing public. The best interest of the consumer will prevail. Those that continue to oppose brokers/insurance agents being held to an objective, non-negotiable fiduciary standard of care will increasingly have their arguements seen through as being self serving and counter to the best interests of the investing public.



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[Lucullus]

Bradley,

Winks will never get it, because he is incapable of acknowledging the validity of any idea that is not consistent with his own. In his mind, an advisor's offering the client the CHOICE of an advisory account (and advisor/client relationship subject to the strictures of the 1940 Act) and buying the product AND ADVICE on a commissioned basis doesn't fit his model, so.... he pretends that it is cannot happen. He characterizes that offering as "offering a false choice" and acting without any accountability.

That is nonsense, of course. Every "dually registered" rep who offers that choice knows that. So do the clients who accept EITHER of the choices offered. The only false element is Winks' clumsy, self-serving interpretation.

To the Winkster, ALL financial planning is portfolio management. Why? Because he knows something about portfolio management and nothing whatever about financial planning. He holds a hammer (because that's the only tool he understands) and sees the world as full of nails. The fact that MANY financial planners do portfolio management as only a PART of their activities and that MANY other planners do not do ANY portfolio management is one he cannot grasp (because it doesn't fit within his constipated perspective). The fact that MANY brokers and insurance agent DO put the client's interest first is yet another reality he cannot acknowledge.

I was at the Financial Planning convention in San Diego last week and had discussions on "standard of care" with quite a few people. A few of them knew Winks' name. They were unanimous in declaring that this guy knows ZIP about financial planning. (One suggested that he also doesn't know much about portfolio management, but that's another story). Financial PLANNERS aren't impressed by the Winkster's doctrinaire bigotry (well, not FAVORABLY impressed, anyway) because they realize - as he will not - that financial planning is a discipline involving many elements, of which portfolio management is often , BUT NOT ALWAYS, one.

If this forum were devoted to PORTFOLIO MANAGEMENT, Mr.Winks might actually have something useful to contribute. But it's not. And he doesn't. COMPREHENSIVE FINANCIAL PLANNING deserves better than a self-appointed, self-serving ignoramus with a Messiah complex.

- John

[Bradly T.]

It also deserves far better than the coverage in this and most other magazines (but then, this is the only one which declares financial planners as its primary audience) and far better than the tripe written by Bob Veres and far better than the so-called leadership in the Noncoalition. Funny that Congress got it right despite all the rhetoric and lies assailing them by these nut jobs. But good for them. Planning is FAR more important to good client outcomes than allocation or asset management/security selection will ever be. To not understand that and embrace that reality is to confess your ignorance and irrelevancy.....or your agenda and chicanery. Crooked or stupid.....which is it Bob V??

[Stephen Winks]

Bradley T and John Olsen, aka Lucullus


You as insurance agents are certainly entitled to your opinions, but not a lisense disparage.



I continue not to bite on the red meat of disparagement which you advance, by purposefully sticking to substantiated facts, reason and logic which you can not refute.



Just to make sure you can not disparage with impunity and for the sake of clarity, you may not be familiar with the fact I focus on providing patented and proven instiutional services in the $100 million and up global institutional market--the most diserning investors on earth. I have been at the forefront in defining advice based on statute, case law and regulatory opinion letters establishing best practices. I have established the necessary enabling resources (prudent process, technology, work flow management, conflict management and expert support for each of the ten major market segments advisors serve) which make advice safe, scalable and easy to execute and manage. Several major global firms are building authenticated prudent investment processes confirming fiduciary standing by expert opinion letter, based on innovations I have championed. So far you boys are weak on substance focusing more on hyperbole, disparagement and bluster. It is pretty obvious you could care less about your clients because you prefer not to be accountable and responsible.



You can not get past your personal self interest to even see what is in the best interest of the consumer which is self defeating for you and your clients. You fellows are doing a great job clarifying your vulnerabilities as a high cost low value added alternative to advisors who acknowledge fiduciary status.



It is time for you to take stock where the industry is and adapt in the best interest of the consumer.



You really have no choice, if you want to be an adviser.



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[Bradly T.]

want to "be" one? Well, I am still trying to become an even better one. The free market you tout should receive greater respect....from you. Most of us in this industry (my model is planning, regrep, and IAR) who survive our first 3 years learn a very important lesson rather quickly - you can be successful ONLY by applying the greatest expertise you have and can gain on behalf of your clients, delivering value the client can perceive and measure, within a relationship experience they come to depend on; and do so in such a way that our clients will clone themselves by referral.


There simply is NO PROFIT in professional indifference to client interests and outcomes when one's survival and success depends on RETAINING assets and clients. THIS is the result of free markets, competition, and access which provides all clients multiple opportunities to GO ELSEWHERE! Now I kow there are churn and burn artists (who must change markets and products frequently to avoid the old tar and feathers) and I know there is inexperience and incompetence, both of which can have as bad a result as the churn and burn artist. But really......to indict most practitioners (of all stripes save one) as indifferent or worse is simply to ignore the reality of being successful in our profession. It takes hard work, nerves of steel, a vertical learning curve decades long, professional expertise, and loyal clients - lots of them if you don't have $500k minimums and 100+ of them.



I thought you said (about 50 times) that the consumer interest always prevails in a free market (I disagree but if you really believe what you say, then believe it), then perhaps consumers are getting what's in their best interest - choice.

[Lucullus]

Bradley,

Give it up! This clown is a legend in his own mind. Witness: " for the sake of clarity, you may not be familiar with the fact I focus on providing patented and proven instiutional services in the $100 million and up global institutional market--the most diserning investors on earth. I have been at the forefront in defining advice based on statute, case law and regulatory opinion letters establishing best practices. I have established the necessary enabling resources (prudent process, technology, work flow management, conflict management and expert support for each of the ten major market segments advisors serve) which make advice safe, scalable and easy to execute and manage. Several major global firms are building authenticated prudent investment processes confirming fiduciary standing by expert opinion letter, based on innovations I have championed."

Apart from the wretchedly bad writing, that paragraph demonstrates at least two things with stunning clarity:
1. Mr. Winks is AWFULLY proud of himself for having - he claims - developed SYSTEMS for managing "process", "work flow management" etc. He's a systems geek.
2. He didn't even MENTION "financial planning" or ANY OF THE ACTIVITIES THAT FINANCIAL PLANNERS DO. Why, one might ask? Well, a likely answer is that he hasn't the faintest idea what financial planners do or should do. If it doesn't involve the SYSTEMS by which a Portfolio Manager does his stuff, Winks simply ignores it.

That he presumes to disparage you, me, and every other REAL advisor who actually DOES financial planning (including EVERYONE who uses mutual funds in portfolios he or she manages and EVERYONE who earns a commission OR EVEN A FEE, UNLESS THAT FEE IS FOR MANAGING PORTFOLIOS) is not merely laughable. It's pathetic. If Winks knows the first thing about how real life financial planners do risk management (which is NOT limited to managing INVESTMENT risk), estate planning, retirement income planning, asset protection planning, etc., he is doing a splendid job of concealing that knowledge.

Brad, you're wasting your time in attempting to debate, seriously - about serious topics - with an ideological buffoon whose ignorance of the very subjects he presumes to pontificate on is staggering.

You and I, and tens of thousands of REAL planners spend our time dealing with client goals, expectations, fears, and BEHAVIORS. We work with HUMAN BEINGS. Winks hasn't a CLUE of how important that is, much less how to do it. He reminds me of "Vger" in the Star Trek motion picture. Neither one of them understands carbon based life forms.

- John

[the observer]

The troll is rotund from all this feeding.

I'll go with Einstein here... Insanity is doing the same thing over and over and expecting a different result... look back at your postings guys!! :)

[Lucullus]

Observer,

"All that is necessary for evil to triumph is for good men to do nothing."

-Edmund Burke

The same can be said of falsehoods. Yes, he's a Troll, and yes, he will continue to spout falsehoods, no matter how often we expose them. But is it truly better to remain silent and allow those falsehoods to stand unchallenged? The profession of financial planning is fighting for its life. If we allow those who insist that financial planning is nothing more than portfolio management and that it must be regulated as such to be the only voices to shape the discussion, we will deserve what they create.

When a nationally recognized journalist who claims to understand the profession of financial planning asks publicly if we financial planners should do more than "tend clients' portfolios", we're in REAL trouble! When a mountebank like Mr. Winks claims that those who reject the notion that the fiduciary standard applying to portfolio managers needs to be broadened to apply to anyone giving financial or insurance advice - whether they manage portfolios or not - are refusing to put clients' interest first, someone needs to call that Foul.

The "standard of care" debate is a serious one. The existing inconsistency of standards and the investor confusion it has created must be addressed and fixed - with rules that make sense given the activities that those rules will govern.

Better disclosure - MUCH better - is essential. And that doesn't just mean "how I get paid". Products that are complicated to the point of being bewildering, presented to the consumer through prospectuses, policies, and brochures that are nearly impossible to decipher, need to be changed. Sales practices need to be improved. (example: I would vote for a rule that forbids presenting a "bonus" annuity unless a "non-bonus" annuity with comparable benefits [except for the bonus] is also presented, and that requires the consumer to affirmatively choose one, and say WHY, in writing).

Sales illustrations using computer ledgers (e.g.: every UL illustration out there) are so bad that we'd be better off if they were simply scrapped.

Insurance agents who do not wish to be regulated as "advisors" should be forbidden to hold themselves out as anything other than "insurance agents". No more "consultants" or "advisors", unless those who employ those terms are willing to meet the standards properly applicable to "advisors".

These are just a few of the changes that I believe need to be made. But one change that does NOT need to be made, one that would wreak havoc on the financial services industry and on financial consumers, is a rule that would require those who do not manage portfolios to be regulated as if they do. Winks' phony "consumerism" reeks of self-interest, nearly as much as it does of rampant ignorance.

But he'll keep up his Crusade of Misinformation - because he can. And Bob Veres will continue to offer commentary on the state of the financial planning profession based on his own gravely mistaken notions - because he can.

Who benefits if we allow them to do so without our pointing out how terribly wrong they are? They do. So do those segments of this industry that profit when misinformation prevails. Do you REALLY want that, Observer?

- John Olsen

[the observer]

Hi John,

The problem with Bob Veres' comments are... he believes his own blather and there are a few who follow him like sheep.

Bob Veres has never been challenged in an open forum in front of a live audience because he's very careful about when, where and to whom he speaks. In this respect he's clever... but then, this is not a unique idea. CFP Board does this all the time.

I'll never forget being invited to a CFP Board "debate" and as I arrived, being told there would be no question and answer session because the debate was merely between CFP Board, NAPFA and FPA...

I'm not as active as I was in the politics of planning any more because I've found another outlet for my energies, one that provides me with a much greater sense of satisfaction than trying to defend an "emerging profession" while 99% of all my colleagues go out and earn lots of money while completely ignoring what's going on around them politically. Mostly, they are an ungrateful lot who get the leadership they deserve and will eventually get the "profession" they deserve.

I would challenge CFP Board, FPA, NAPFA and Bob Veres to get on a panel with me any time and debate me on the "emerging profession" and "fiduciary" issues, trouble is, they're all chicken. They like to be "among their own" in their comfort zone and me taking them to the woodshed is way outside their comfort zone. Unlike some here, I know where the skeletons are. There's no point in trying to debate them any more. With their oligarchic approach to government there will never be a voice of dissent, there will just be this pathetic misguided bunch of egoists that will eventually march us into oblivion!

I applaud your tenacity John! :)

[Stephen Winks]

John Olsen aka Lucullus, Bradley T, and "the observer,"


I agree with your observations on insurance abuse and complexity.



In order to bring fiduciary standing within the reach of everyone, advice must be simplified without the denigration of the traditional understanding of fiduciary duty. This requires prudent (fiduciary) process authenticated by statutory documentation, advanced technology, work flow management and conflict of interest management in support of expert counsel customized for each of the ten major market segments advisers serve. The depth and breadth of data that must be managed goes far beyond the limited three dimentional capacity of a human being to process. You may not like this but it is a fact and is required for continuous comprehensive counsel necessary for fiduciary standing. Process, technology, work flow management and conflict of interest management are what makes fiduciary standing, safe, scalable, easy to execute and manage with out denigration of an expert fiduciary standard of care. This is what brings fiduciary standing within the reach of all. This sort of simplification that facilitates universal access and support for fiduciary standing, is beyond the reach of individual brokers and advisors as it requires both scale and expert credentials in several technical disciplines which are not familiar to insurance agents and brokers alike.



I take exception to your observation that I do not know a thing about financial planning. You may not be aware I was a financial and business partner with John Bell Keeble, the father of financial planning, and ran the largest centralized financial planning function in the country serving thousands of planners, and personally know and have worked with those that literally invented financial planning and nurtured it for over a decade before it became economically self sustaining as a commercially viable enterprise and trade association. I would suggest my understanding of financial planning to include the investment side is at a fairly advanced state--contrary to your assertion otherwise. I have an even deeper understanding of fiduciary issues, the institutional markets, Post Modern Portfolio Theory, and how to operationalize and make safe the acknowledgement of expert fiduciary standing. This requires an advanced understanding of enabling technology that our industry's technical experts are just now beginning to integrate into easy to use systems.



It is important to note that you three (a) have insisted over the past three years that you were acting in a fiduciary capacity until I definitively proved otherwise, (b) you observed objective, non-negotiable fiduciary criteria of statute, case law and regulatory opinion letters as being a matter of opinion, (c) have yet to advance an arguement against holding brokers to the fiduciary standard of care which has not been sucessfully rebutted. As insurance agents you are entitled to your opinion which is counter to the best interests of the consumer, but you certainly do not speak for the vast majority of brokers and advisors that want to act in the best interest of the consumer.



With "the observed" back in your insurance pack, I fully expect the level of disparagement to increase, but this serves a purpose--to expose the lack of substance in your arguements which are and continue to be counter to the best interest of the consumer and fiduciary standing. I look forward to the opportunity to refute any and every false arguement you advance.



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[Bradly T.]

Mr. Winks - one simple question if you please......are portfolio allocation and security selection elements in the financial planning process? A one word answer will reveal all we need to know about your superior understanding of financial planning. (Hint - the correct answer is NO.)

[the observer]

Another question, isn't Barr Rosenberg an "adviser to advisers" as well?? I know you go to the same conferences... I'm hoping this software solution you're trying to flog people is better than his! But at least you don't have to worry about being barred from the business by the SEC, you're not in the business!

BTW, John and Brad... the troll writes: "It is important to note that you three (a) have insisted over the past three years that you were acting in a fiduciary capacity until I definitively proved otherwise...

Did I miss something??? I mean, he doesn't even know who you really are Brad...

[Lucullus]

Observer,

You didn't miss anything. The Winkster's assertion that -

"It is important to note that you three (a) have insisted over the past three years that you were acting in a fiduciary capacity until I definitively proved otherwise, (b) you observed objective, non-negotiable fiduciary criteria of statute, case law and regulatory opinion letters as being a matter of opinion, (c) have yet to advance an arguement against holding brokers to the fiduciary standard of care which has not been sucessfully rebutted"

- is another of his fantasies. (a) is pure invention. Speaking only for myself, I HAVE acknowledged that I act in A fiduciary capacity when I act as an investment advisor, but I have consistently denied that that Winks' notion of fiduciary duty is what binds everyone who gives any kind of advice. He's obsessed with portfolio management, and thinks that the standard of care appropriate to portfolio managers binds everyone, including those who don't manage portfolios. I have also acknowledged that sometimes I act purely as an insurance agent, for clients who have not retained me as an "investment advisor" and for whom I do not render investment advice. In those circumstances, I am not subject to the same standard of care as when I do act as an "investment advisor".

I have stated, many times, that the current "suitability" standard, applying to insurance agents and brokers when they are not giving "personalized advice regarding securities to retail customers" ought to be stiffened. Disclosure of compensation and all conflicts of interest simply makes sense. I've been doing that for many years, even when not obliged to do so.

As for Winks' claim that he has "definitely proved otherwise", he's a very confused fellow. He has argued, at one time or another, that when one acts as an insurance agent, one DOES bear fiduciary duty and, at other times, that the reverse is true. Moreover, Winks has never observed Bradley or myself work with clients, but he has repeatedly denounced what he THINKS we do. He simply ASSUMES bad behavior on our part and then denounces it. That's how he "proves" things.

(b) is mere jibberish; I have no idea what Winks meant to say or thinks that he said. Perhaps he is referring to the fact that Bradley and I have rejected his insistence that Steven Winks' personal notions of what fiduciary duty are "the law". (e.g.: he's insisted that "the" fiduciary duty requires an ongoing advisory relationship and implied that it also requires discretionary authority; he's stated, as "fact", that no portfolio manager who uses mutual funds can be in compliance with "the" fiduciary duty)

(c) is wishful thinking on Winks' part. We have advanced several arguments as to why it makes no sense to subject those who do not manage portfolios to the standard of care properly applicable to those who do manage portfolios, and Winks has failed to counter a single one. He hasn't even tried. He simply repeats mantra, as if repetition will make up for an absence of evidence.

As for Winks' recitation of his curriculum vitae, he evidently finds it impressive. Well, someone should. For my part, I consider that the worth of a man's arguments lies in those arguments. If, like Winks, he demonstrates a persistent ignorance of what financial planning is and how it's done, continuing to bleat that it's merely another name for portfolio management, then he's provided all the evidence anyone needs as to his understanding and competence.

Winks writes: " I would suggest my understanding of financial planning to include the investment side is at a fairly advanced state".

I would agree that IF his understanding of financial planning is at a fairly advanced state, it's at an advanced state of decomposition. He's demonstrated, from his first barging into these forums, an appalling ignorance of financial planning and how it's done. Over hundreds of postings, he has shown no wish to cure either deficiency. Indeed, he has added to it, with repeated inventions masquerading as fact. He's declared that his own trembling arguments are "irrefutable", as if his believing them to be so makes them so. And he's "refuted" the arguments of others by misstating them and then arguing against the misstated versions.

Example: Bradley and I disputed that Winks' "portfolio manager" standard of fiduciary duty applies, or ever should apply, to a life insurance agent who is acting solely in that capacity. Winks' puerile response was to declare that an element of fiduciary duty is "putting the client's interest first", and that, therefore, our argument that his version of fiduciary duty doesn't apply to insurance agents meant that we refuse to put the client's interest first.

He may actually be so ignorant of the principles of logical argumentation that he believes that (i.e.: if A, B, and C are essential elements of Theta, anyone who believes that Theta is not properly applicable to him necessarily rejects the applicability of A, B, and/or C).

Simple ignorance is curable; willfull, persistent, deliberate ignorance is not. That Mr. Winks presumes to lecture others on a subject about which he is staggeringly ignorant is not so much annoying as it is pathetic.

- John Olsen

[Bradly T.]

spam bump

[Stephen Winks]

John Olsen, Bradley T, the observer,

You boys insist on putting your foot in your mouth.

The discussion is over. You agree you are neither accountable for your recommendations after you are paid and have no ongoing fiduciary duty of care and loyalty to your clients to act on their behalf in the client's best interest. There is no debate here. You are clearily and definitively not acting in the client's best interest nor are you responsible for every recommendation you have ever made which is the continuous comprehensive counsel required for fiduciary standing. You are neither accountable nor responsible--which says it all.

This mindless vitriol serves no purpose other than to inform us of your character. We already know of your very low regard for professional standing. Your comments only affirm you are part of the most undesirable, least professional elements of our industry which prefers to place its best interest ahead of that of the consumer.

Please don't bore us with your vacuous disparagement.

SCW

[Bradly T.]

"The discussion is over"?? Then you're done? Good. It would appear the discussion in DC has barely begun. Also good. I finally realized the importance of the very word "harmonize". How precisely accurate!! What is harmony? A minimum of two distinct and different notes which, when blended or played together, provides a singular sound, different from and greater than any of the individual notes played (or heard). It would appear there are those who are unfamiliar with the term or its meaning as they would lead us to believe that to harmonize is to find a singular note for all to play at the same time in the same way - but this is NOT harmony.


There has been much to-do about the "confusion" of clients (although several studies have shown that clarity does NOT show any client preference to managed accounts nor is there any evidence of one standard's outcomes being any better related to performance, ethics, or expertise), and the DOL has been brought to heel recently (one can only imagine the political threats and the litigation being prepared against them) but client confusion can hardly be molified by any "harmonization" resulting, still, in various and distinct business models and obligations. Many are now calling for, quite correctly, quantification and verification and specification of precisely the "failure" of "suitability and disclosure" to serve the public interest and to further qualify the consequences and verify the costs of any and all changes - which will STILL result in two distinct standards to reach the goal of "harmonization".



It is more and more apparent to most that the very issue is pure red herring, embraced by politicians and regulators and Wall St. and big banks, to look busy while ignoring the many actual causes for our recent collapse and calamity. Why? Because it is far easier to pretend to be fixing what went wrong using illusion, sleight of hand, and diversion than it is to actually cut someone in half inside the magic box - voila, abracadabra!! "Pay no attention to the man behind the curtain!!" But it is what's behind the curtain that IS the core of the problem.....and the solution to it too. Perhaps the DOL will even lose it's so-called "oversight" and enforcement of all ERISA too. They should. They have been a big part of a big problem - the very worst of all investor outcomes, bar none, the past two decades. The DOL has no business of any kind in enforcing or rule making for ANY securities business of any kind - especially for the working class. It is not and never should have been their's to screw up. Let us all hope that "harmonization" results in the end of the DOL and ERISA fiasco.

[Stephen Winks]

Bradley T,

There you go again.

To call consumer protection a fiasco, based on centuries of common law, is all we need to know.

It is a shame you have you have no idea what "in the client's best interest" means--which is the point of regulatory reform.

SCW

[Stephen Winks]

Bradley T,

There you go again.

To call consumer protection a fiasco, based on centuries of common law, is all we need to know.

It is a shame you have you have no idea what "in the client's best interest" means--which is the point of regulatory reform.

SCW

[Bradly T.]

Consumer protection is best achieved by choice, access, and competition....especially within-firm. Only dual indie hybrids offer true choice and must, by rule, disclose the costs of each and all choices, providing consumers both the access (for those who qualify) and the choice (for those who qualify) of either or both options as an integrated solution strategy. RIAs do not and will not compare their endless high fees to other options. Reps do not and will not compare the potential advantages of managed accounts to commissioned solutions. The exception, of course, are those of us who provide both business/compensation/investment models under one roof. Interestingly enough, dual hybrid indies also offer the highest percentage of CFPs, PFS, and ChFC planning services as an integrated element to portfolio design and security selection to VERIFY the efficacy of their recommendations.


You still miss the obvious point - it is comprehensive financial planning that is THE differentiator between good client outcomes and relationships compared to ANY AND ALL OTHER options available. Retail distribution models (yes, RIAs are a distribution model too - ask any third party manager) did not cause and can never cure the cause of the last or next swan, collapse, crash. The DOL is getting an earful as they back up as fast as they can and try desperately to hold onto their ERISA fiasco - the worst and least of all fiduciary standards ever devised (of the 8-10 different fiduciary standards in-force today). Why have 401k participants experienced the very worst of all investor-group outcomes the past two decades if ERISA were successful. It is only successful at keeping actual advisors at bay and away from the rank and file participant. Less than 1% of all 401k participants have ever MET their plan "fiduciary". Just exactly how can one BE a fiduciary to a participant they have never met nor provided ANY advice (forget about personal financial planning!)?? Pure hypocracy and deception and certainly NOT in the "consumer's interest" nor the public interest. Balderdash sir. Take 401ks away from the DOL!!! Do it now!! Help protect the public and participants from the idiots and laggards at the DOL!!



It has been a total failure thanks to the DOL!! Congress has rightly determined that both the SEC and the DOL must first prove and measure whatever "harm" has come from the status quo prior to changing it to something far worse and far less accesible to average Americans. I find it interesting how the very rich are also dimminishing managed account balances and how many smart people prefer alternatives - including annuities, brokerage, and directly held accounts in funds, REITs, partnerships, private equity, etc. Is this because managed accounts are inferior? No. It simply means they are not, never have been, and never will be the singular solution for wealth mangement. Indeed, no such account exists. Part of proper diversification is institutional diversification and product/platform diversification to achieve the broadest spectrum of markets and securities available. But then, only a planner would know that....and you're no planner (or rep, or agent, or advisor for that matter). But please bray on!! HeeHaw!!

[Stephen Winks]

Bradley T,

The choice you speak of is a very expensive inferior product sale which is neither client specific nor entails accountability or responsibility to act in the consumer's best interest. You are fooling yourself if you think enterprising advisors will not point out you are neither accountable or responsible and are more expensive as well.

I would urge you to align your interest with the best intererst of the consumer so your professional standing would warrant the trust and confidence of the investing pubic.

SCW

[Bradly T.]

Expensive? Inferior? Which account are you referencing? Compared to what? Relative net rate of return and risk adjusted return is oblivious to "cost" of ownership - it's a value equation. And cost is measured "over-time", making managed accounts among the very most expensive ownership "cost" vehicles available today - not that value cannot be delivered by this option, it certainly can and does - (I know - I offer that and many other options). And you continue to ignore issues far more important than simple cost (or even value) - minimum balance requirement, distribution methodologies, institutional diversification, access to non-traded asset classes, future outcome guarantees, risk and cash management, etc.


The weakest model, by definition, is the one trick pony option - especially that which reduces access to the most investors and costs the most over time and prevents the application of a wide spectrum of wealth management and protection vehicles. The dual indie hybrid is the model which best "aligns (my) interest with the best interest of the consumer"... and they certainly agree, as does Congress, as does our industry since it is the fastest growing model for AUM and advisor growth measured by practitioners. Only monopolists believe competition is a bad thing for "the consumer interest". Compete or die. I'm willing. You might too....if you were a planner or advisor or rep or agent or had any clients to whom you actually owed ANY professional obligation of any kind. You're just a self dealing product pusher hoping to create a conrnered market.

[Lucullus]

Bradley,

Any product that is ever recommended by anyone who does not agree 100% with the Gospel According To Winks is expensive and inferior. That should be obvious to anyone who understands Winksian Logic, which goes like this:

An indispensible element of the fiduciary duty that applies to portfolio managers is putting the client's interest first.
John does not agree that the duty that applies to portfolio managers should apply to those who do not manage portfolios.
Therefore: John does not agree to put the client's interest first.

or

Investment advisors are subject to fiduciary duty
Financial planners are subject to fiduciary duty
Some investment advisors do financial planning
Therefore, financial planning is a part of giving investment advice.

You cannot debate with someone who thinks that sillygisms like that are either valid or sound for the same reason that you cannot debate cosmology with someone who believes that the earth is flat.

And when someone like that makes a comment like "I would urge you to align your interest with the best intererst of the consumer so your professional standing would warrant the trust and confidence of the investing pubic", about all you can do is to point out the there is an "l" in the word "public". Because the mere thought that you are ALREADY aligning yourself with the best interest of the customer is abhorrent to the Winkster. He cannot accept the possibility of such a thing because it would make obvious the fact (which is obvious to everyone who has both an understanding of logic and the willingness to employ it) that aligning oneself with the best interests of the investment public does not require one to accept Winksian dogma. That is: that "putting the client's interest first" is a very different thing from "putting first what Steven Winks thinks amounts to putting the client's interest first".

As an advocate for consumers, Winks makes a great Kool Aid salesman.

- John

[Bradly T.]

My first manager in the industry used to make me, literally, practice my presentations to an old fence post alongside the road (yes - was and still am rural) during my training and on the way to an appointment. His angle was if you can't articulate well to a fence post, you've got no business in front of a client. I made many a presentation to many a different fence post....it didn't seem fair to brutalize the same post over and over. It was simple skill/saw sharpening. I never thought I'd actually meet a fence post on-line at a professional discussion board some 25 years later, but I must agree, the poor guy has a similar value/purpose and IQ. Developing sound and reasoned positions (for me at least) takes some time and practice to work through to both an understanding and articulation of situational rationale. There are no absolutes in logic or truth - it takes time to identify inconsistancies and logic loops/traps.


It's important for all of us to develop professional practices and preferences which we can be sincere advocates of and represent effectively to our clients. They all "know" things and have "heard or read" things and have prejudices that interfere with opportunity. We cannot afford to blow in the wind and be dictated to by clients or managers or home offices or "experts" or regulators or journalists (Lord help us) or "hot" products. We really must think these conflicts through for ourselves to have confidence in our process, purpose, and value. We are all wrong to some degree or another, naturally, and flexibility and evolution and experience will change our positions some over time if our IQ and character will allow it. Information is not knowledge and knowledge is not experience and there's no substitute for experience in the quest for expertise and impact.



But we can all begin with and stay true to a personal and professional commitment to ethics and good client outcomes, regardless of our information, knowledge, and experience (or business model or compensation form or income level or manager). This is the core element of all true professionals - the intent to do a good job and an effort to know more and do better. This truth is lost on some. Especially those who feel that only laws and regulations can deliver ethics or protect clients, despite all the "centuries" of evidence to the contrary.



I feel we are approaching an historic opportunity to fight back and take back from the DOL and the SEC what they have abused, squandered, and failed at. ERISA is easily proved to be the abject failure poster child for screwing middle America. We should demand their exit from a business that is none of theirs and they have failed at so apparently, measureably, and horrifically. And the SEC should REQUIRE financial planning as a core obligation to ANY AND ALL investment advisors who CLAIM to be fiduciaries since one cannot possibly BE a fiduciary of someone's money without CONTEXT provided ONLY by comprehensive planning. This does not mean all models must do so.....only those who are acting as fiduciaries. Indeed, the SEC should be focused on custodians, trade execution, exchanges, products, traders, markets, counter party risk, etc. They should NOT be regulating distribution due to prior failures, lack of funding, the obvious reality that retail distribution and asset management is completely different and seperate from those elements listed above (except of course for those who hold custody, create statements, and have discretion over other's money).



It's time to get off defense and get offensive, so to speak, VERY offensive and demand that competition and evolution of distribution be allowed to serve the greatest number in accessing the greatest spectrum of viable, vetted, and effective products and services.



I have nothing to apologize for or be scape goated for and I'm getting damn sick and tired of Mr. Winks and his cronies and the press who blame retail distribution/advice on the malfeacence and greed and stupidity still running rampant in our industry today - primarily and specifically in DC and Wall Street. We are NOT the problem....never have been (except for that 1% or so driven by greed; hucksters live in every industry including medicine and law, ours is no worse ethically). So forgive my fence-post presentations - they are not meant to change the dumb post but to clarify my own thinking so I can remain an advocate for choice and the main street, small net worth households I am committed to serving. I love this country and this business!!