Financial Planning Coalition Lobbies SEC to Broaden Fiduciary Standard

[Bradly T.]

While I am not opposed in the least to the expansion of client centric motivation for any and all professionals and also believe that all non-custodial retail advisors and reps have more in common than not, I find this brief "headline" article troubling for several reasons. First - aside from NAPFA, a pure AUM RIA membership organization (with several past leaders and members in jail or court for fiduciary fraud and theft), neither the FPA nor The CFP Board has ANY business whatsoever petitioning or lobbying the SEC for ANY reason whatsoever....or I should say, they have the same business in lobbying the FDA, FEMA, FDIC, USDA, etc. as they do the SEC!! Second, they do NOT represent thousands of "advisors", or I should say they should NOT.....they should, but do NOT, represent tens of thousands of financial planners from many diverse industries and business models. The Board failed to get even 10% - READ IT AGAIN - not 10% of certificants to sign this petition (so much for "representing").


The Noncoalition represents no one but themselves and a transparent agenda, without broad based support of even those they are supposed to represent, for the purpose of lining their own pockets and abandoning the development of a true coalition of planning professionals and an actual profession of planning. Only their motive is a bigger lie than their name. It would appear that FP Magazine has joined the Noncoalition in this duplicit fraud and has so far refused to actually investigate or report on this important story.



Journalism? I think not.

[Bradly T.]

Surely someone supports FP's journalistic integrity and the noncoalition's mission....?????? Come on, the Board did get 5,500 signatures or so (out of 65,000 of us). Someone out here must feel "represented". No????? There's got to be a story in there somewhere FP.

[Stephen Winks]

Bradley T,

As an insurance agent you just can't relate to the concept of acting in your client's best interest. Yet, in the history of man there is not one instance where the best interersts of the consumer has not prevailed in a free market. You are on the wrong side of history.

The insurance industry is not structured for its salesmen be held accountable for every insurance policy they have ever sold, as advisers are accountable for every investment they have recommended. If ongoing accountability for recommendations and transparency in cost and compensation required for fiduciary standing, were to be abided by-- the insurance industry would adapt its products accordingly in the clients best interest--a very good thing for all.

You may never want to "get it", but you might try to understand it from the perspective of the "Golden Rule", wouldn't you want to know over time that your adviser was acting as a good stewart in monitoring their recommendations in your best interest, rather your having to figure out you were getting extremely high product cost and no ongoing service.

You are disincented to monitor your recommendations for cost and effectiveness--a fundamental fiduciary duty required for continuous comprehensive counsel in your client's best interest.

SCW

[Lucullus]

More ad hominem arguments from a guy who fairly drips self-interest.

Bradley, why do you continue to respond to someone who consistently misrepresents the views of others, offers his own conjectures and wishful thinking as "evidence", disavows his own published misstatements, and consistently employs argumentative logic that would embarrass Glenn Beck?

You cannot persuade him, for his mind is welded shut from the inside. And you cannot educate him, for he refuses to acknowledge his own egregious ignorance.

But if you enjoy engaging in a shoving match with a tackle dummy, have fun.

[Stephen Winks]

Lucillus, (why don't you use your real name, John Olsen),

Aren't you leading advocate for NAIFA who wants to kill fiduciary standing which would be in the best interest of the insurance industry rather than in consumer's best interest?

If you could point out ANY self interest on my part, you might have a point, but then again you can't.

The "dripping in self interest" comment is specifically and far more directly applicable for you?

SCW

[Lucullus]

Self interest.

Well, let's see. Suppose we had a fellow who proclaimed, constantly, that EVERYONE who wears a hat must abide by the rules of those who wear military headgear (e.g.: when "covers" are to be worn, when not, saluting when covered or uncovered, etc.) even those who wear civilian headgear. And suppose this fellow's firm offered guidance (for a fee) to those who wear military headgear or who are subject to the rules of same. Do you think this guy might actually have a conflict of interest?

Duh! Mr. Winks insists that everyone be compelled to play by the rules that HE likes (because he gets paid for helping people comply with that particular set of rules), whether those rules make sense for the activities engaged in or not, and denies that he has a self-interest in advocating such compulsion. That isn't so much deplorable as it is pathetic.

As for the question "Aren't you leading advocate for NAIFA who wants to kill fiduciary standing which would be in the best interest of the insurance industry rather than in consumer's best interest?"...

The answer to that is a flat "NO".

First, because NAIFA does NOT "want to kill fiduciary standing" (that is Mr. Winks' opinion; it's not fact, however much he wishes us to perceive his opinions as fact), but, rather, objects to the application of a unified fiduciary standard (that standard that currently applies to trustees and portfolio managers) to agents who sell insurance policies and who do NOT offer "personalized investment advice about securities".

Second, because I DO NOT agree with NAIFA's position with regard to the application of some elements of fiduciary duty to insurance agents. Example: I happen to AGREE that insurance agents should be legally obliged to disclose commissions (I have been doing so, in my capacity of insurance agent, for many years) and any conflicts of interest that cannot be avoided (such as the agency duty to an insurer).

Mr. Winks prefers to pidgeonhole those who disagree with him into neat (if absurdly inappropriate) categories and then expects everyone else to view them that way. Thus, Bradley is (in Mr. Winks jaundiced vision) just "an insurance agent", despite the fact that Bradley has repeatedly stated that "insurance agent" is only one of the capacities in which Bradley works. In that same constipated mindselt, And I (in Mr. Winks' fantasies) am "a leading advocate for NAIFA", which, he proclaims, has taken a position that it has not taken, and, like Bradley, just "an insurance agent".

Disclosure: I am a NAIFA member, and past President of one of its largest chapters. The notion that this means that I always agree with every position NAIFA takes is illogical, unfounded, and, frankly, rather childish. I am also a licensed insurance agent. The notion that this means I always act as an insurance agent, despite the fact that I am also a registered representatives and Registered Investment Advisory Associate, is no better. I've revealed, repeatedly, in this forum, that I am bound by fiduciary duty when I act in that latter capacity, and that I am perfectly happy to be thus bound. But Mr. Winks forgets that (or pretends to).

That said, I do object to being bound to rules that are applicable to those who manage portfolios even when I do not manage portfolios, and to those who have discretionary authority over client accounts (when I have never, and will never, accept such authority). Mr. Winks claims that those activities are indispensible elements of ANY fiduciary duty. He's dead wrong.

I object to Mr. Winks' contempt for accuracy, fairness, and logic almost as much as I deplore his phony sanctimony.

- John Olsen (who has never concealed his identity, but who will continue to use his screen name of Lucullus, whether Mr. Winks likes it or not)

[Bradly T.]

Question - Is an insult from a moron a compliment?? While I don't mind being accused of what I am - a state licensed insurance agent in this case - it seems rather narrow to exclude that I'm old, grey haired, have several cavaties, wear 8 1/2 size shoes and size 9 boots, like gardening and the blues, I'm a registered voter with Libertarian opinions - who agrees with almost nobody, once managed a band, have a daughter and two step daughters, walk to work, am a grill master, and have a cat (well, I'm actually babysitting my kid's cat so I should leave that one out). And oh yeah, I'm reg rep, and IAR, a CFP, ChFC in a CPA firm with 25 years of successful and actual professional practice - but hey, what has that to do with anything.......I AM also an insurance agent.....and I've known some very fine ones I can only aspire to emulate. To be attacked by someone is NONE of those things is amusing (well maybe Winks IS a cat owner).

[Lucullus]

I was informed, in a private email from a reader of this forum, that I erred in my previous posting, in which I said
"I object to Mr. Winks' contempt for accuracy, fairness, and logic almost as much as I deplore his phony sanctimony."

My correspondent reminded me that sanctimony means "Feigned piety or righteousness; hypocritical devoutness or high-mindedness" and that I was wrong to say that Mr. Winks' sanctimony is "phony".

I admit my error, apologize to Mr. Winks for same, and freely admit that Mr. Winks is genuinely sanctimonious.

[Stephen Winks]

Bradley T,

Thanks for that clarification. I understand now where you are comming from, when you disagree with almost everyone.

SCW

Lucullus,

No sanctimony here, just a guy who cares about investment advice, centuries old criteria for fiduciary standing and the slow but sure evolution of the industry into a profession. You just happen to be on the other side of the arguement. Essentially the question is whether investors can rely upon the advice of their broker/adviser without having ongoing accountability for their recommendations. There are specific fiduciary duties required of advisers that are not required under a suitability standard. The differences in consumer protection foster a materially different level of counsel.

There are many advisers who are compelled to act in the best interest of their clients and there are many brokers who do not. Let the marketplace be the arbiter. There has never been an instance in the free market where the consumer's best interest has not prevailed. There is no conflict of interest in my helping advisers who wish to act in their client's best interest, unless you are not acting in your clients best interest which is in conflict with your business model.

The fact that expert fiduciary counsel is faster, better, cheaper than commission sales and commands higher earnings, margins and earnings multiple, suggests that it is in the enlightened best interest of the broker and the industry to align with the best interest of the consumer. It is totally your choice how you choose to manage your business, you just don't realize you are self selecting to be on the wrong side of history.

SCW

SCW

[Lucullus]

Bradley,

The answer to your question is "yes".

[the observer]

The CFP Board as part of this Financial Planning Coalition is misappropriating stakeholder funds to lobby for changes to "securities" regulation instead of focusing on "financial planning". They should all resign...

The entire coalition representing "purportedly" over 75,000 (fuzzy math) planners can only motivate 5,500 of those highly motivated and "represented" planners to ink a letter already written for them... and that's representation??? They should be looking for a rock to hide under.

There is absolutely no need to broaden the fiduciary standard to allow series 6 & 7 guys to offer "personalized investment advice", the correct registration for this activity is the series 65 or equivalent. Series 6 & 7's don't have the authority to do what they are doing. The inaction and reckless negligence of the SEC and FINRA have allowed series 6 & 7 reps to act outside their authority and that is the problem here. Kindly note for all the haters... I didn't say they weren't smart enough or "qualified enough", just not registered in any capacity to offer "personalized investment advice".

There is only one clean way to do this and the entire industry, Congress, the SEC and FINRA won't do it, namely: Either stop all this nonsense now and enforce rigorously the laws already on the books to stop this unlawful behavior on the part of many brokerage houses, or, DO AWAY with the series 6 & 7 registrations altogether...

Instead, the SEC has already created new and lucrative registrations for back office non-sales staff and FINRA will continue to collect lots of money from Series 6 & 7's.

I would sit in a conference hall with the coalition on any day and decimate their arguments given the chance...

The biggest chance to effect change in the securities industry comes not from the coalition or any other self serving lobby... it will come from legislation, which will hopefully pass, that will force all serving members of the house and senate to deposit all investments in a blind trust to stop them doing bad things. I'm damned sure they'll want fiduciaries handling their money for them.

All this other nonsense is self-serving on the part of a few (5,500) out of hundreds of thousands of planners nationwide, a few who want a competitive advantage and a huge barrier to entry in to the securities profession... and frankly for a coalition that claims to be promoting "financial planning", all they seem to be doing is promoting themselves and tougher securities regulations. Disgusting.

[Bradly T.]

Thanks for bringing us back on-point. What I find most interesting is how neither fiduciary RIAs nor reg reps are truly regulated by what they do. RIAs are so-called "fiduciaries" and yet have no legal obligation to act in their clients best interest EXCEPT within the pocket of money covered by a lonnnnnnnnnggggggggg and dense allocation agreement limiting their obligation - there is no holistic of comprehensive financial obligation (to be sure, many RIAs act beyond the requirements and do utilize planning within their process). And reg reps do not, supposedly, give "advice" and yet must recommend financial products that ARE suitable in the holistic context (and many also provide this nonadvice from a comprehensive planning process). One must give advice without context and the other must not give advice within context. Nutty.


Both sets of regulations ignore the client need and the reality of current practice. It is not just one side of these models that needs change IMO (and I work both sides).

[Stephen Winks]

Bradley T, John Olsen and the observer,

You miss the point that the best interest of the consumer is the question and a uniform fiduciary standard of care removes confusion as to who is acting in the consumer's best interest.

The only reason why you would oppose fiduciary standing is that you are not interested in acting in your client's best interest.

I certainly understand you prefer to be salesmen, there is nothing wrong with that, just you can not say you are an adviser without subscribing to the fiducuary standard of care.

SCW

[Stephen Winks]

Bradley T,

You suppose that planning is synonymous with fiduciary standing, and it could be but it does not necessarily follow all planners are fiduciaries.

SCW

[Stephen Winks]

The observer.

I agree the Coalitions arguements at best are weak because they do not want to offend the majority of their members who are brokers, yet the arguement for acting in the consumer's best interests is so strong, I doubt you would decimate it, as simply on the fact of it your would be opposed to the best interest of the consumer--an untenable position which we have discussed many times. If you remove disparagement from your arsenal--you have no substantive points to be made in your arguement. If so I would love to heard them.

SCW

[Lucullus]

"The only reason why you would oppose fiduciary standing is that you are not interested in acting in your client's best interest".

Another example of Winksian "logic". First, it assumes that the person to whom this statement is addressed opposes fiduciary standing. As Bradley and I have stated repeatedly, we bear that duty when we give "personalized investment advice involving securities", and we're just fine with that. What we DO oppose is the extension of a TYPE of fiduciary duty to activities to which it is not properly applicable. Mr. Winks has declared that indispensible elements of ANY fiduciary duty include (a) ongoing oversight and duty and (b) discretionary authority.

He is dead wrong! Not all advisors assume ongoing duty and not all clients require it. In fact, some clients do not wish that relationship (as the Garrett Financial Network knows well). Moreover, many advisors do not and will not accept discretionary authority. In short, not everyone works the way Mr. Winks says that everyone ought to work. Fortunately, people who actually do understand these issues do not accept his fantasies. Dodd-Frank states, explicitly, that ongoing duty WILL NOT be an essential element of the standard of care that it directs the SEC to craft. Mr. Winks knows that, but he won't acknowledge it because it doesn't fit his notion of What Should Be.

Second, Mr. Winks statement is a textbook example of the logical flaw of stating as fact that which the speaker simply wishes were fact. In Mr. Winks' middle school mentality, what he wants to believe must be true, and no evidence is required. He equates an opposition to fiduciary duty - or a wished for opposition to it - with a refusal to put the client's interest first, and declares the two to be identical.

That amounts to "If you don't agree with every element of my conception of ethical duty, you don't wish to be ethical". It's not just childishly illogical; it's contemptuous. And contemptible.

I acknowledge that there is more than one way to view the Standard of Care debate, and that some folks who hold views quite different from mine are sincere and that their views often have merit. Indeed, I don't believe that anyone - myself included - has come up with the "perfect" solution to what amounts to a knotty ethical/regulatory problem.

Mr. Winks' sees it differently. HIS way is THE way and anyone who disagrees with his way is wrong. He feels free to mischaracterize the views of opponents, disavow his own statements (when they've been publicly shown to be absurd), and employ an argumentative style that shows no respect for facts or logic. And, in all of this, he claims to be taking the moral high road.

Just what our profession needs.... its own Taliban.

- John Olsen

[Bradly T.]

I may be mistaken but I believe of all the posters here that the observer is ONLY a fiduciary and has acted exclusively in that environment for some time. John and I are dually registered and operate under the obligations of our credentials, our engagements, and our sense of professional ethics while applying comprehensive financial planning and wealth risk/accumulation/management/distribution to long standing client relationships which bring 100% of wallet share and endless referrals because of our committment to client outcomes (ethics) and our results (expertise) and our process - a prudent and professional one. Haven't read a single post from a single contributor here in 3 years that displayed client indifference or supported lack of expertise.....not one yet.


I howl at the reasoning that one acts in a certain way due to regulation as if Madoff, Starr, and hundreds of fiduciaries, so "compelled", were not sitting in jails and courtrooms for NOT acting as "compelled" by regulation. The two main points are that retail distribution of no kind had anything to do with the collapse and that a harmonized or any other standard will not deliver ethics or expertise to the market place and there is ample evidence (if one were interested in facts and reality) that both of these premises are true.



But neither of those points or the solution, if one is needed (now there's an issue for discussion), have anything to do with this thread.....which is the false headline and byline of the referenced article. The Noncoalition is precisely that and has no mandate or relevancy for or to their mission....as a nonprofit PAC, taking money from the unrepresented to lobby government agencies, in pursuit of a fatcat SRO "contract" and exclusive monopolization of all who practice planning or apply the process of planning to their many, diverse professions and business models. This thread is about the Noncoalition not only NOT being a coalition and acting without mandate against their members' and certificants' best interests and doing so illegally I'm sure, but actually damaging and abandoning their original mission of creating inclusion, coalitions, and agreement for the foundation building work of constructing a PROFESSION.

[Stephen Winks]

John Olsen,

In a few days the DOL will announce its definition of fiduciary which will be anyone who provides advice and charges a fee would be subject to the fiduciary standard of care based on objective, non-negotiable fiduciary criteria of statute, case law and regulatory opinion letters. This is not Steve Winks' opinion, it is statutory requirements--not "Winks flawed logic."

Hopefully, you will then ascribe to objective fiduciary criteria for the advice you render. With this clarity, establishing expert precedent, you might consider your ongoing responsibility for every insurance contract you have ever sold. I realize the DOL has no jurisdiction over insurance sales, but if you subscribe to fiduciary standing as you say, where appropriate, how would you rationalize not having ongoing responsibility for your recommendations? Is it ok to act in the client's best interest except for insurance agents? You are forgetting the Congressional objective of an uniform (as in incorporating the DOL language) fiduciary standard.

You have a long way to go, to defend your position. So far, it is just disparaging me, a good insurance sales practice to disparrage your competitors in your local market in order to win business--not based on objective criteria, just baased on character assignation.

So, why is it again, that you are opposed to acting in your client's best interest? This time, try not to disparage me and just stick to the reasons why the fiduciary standing of the adviser is not a great idea. We all understand insurance agents are not fiduciaries--but is that a reasonable excuse?

SCW

[Stephen Winks]

John Olsen,

In a few days the DOL will announce its definition of fiduciary which will be anyone who provides advice and charges a fee would be subject to the fiduciary standard of care based on objective, non-negotiable fiduciary criteria of statute, case law and regulatory opinion letters. This is not Steve Winks' opinion, it is statutory requirements--not "Winks flawed logic."

Hopefully, you will then ascribe to objective fiduciary criteria for the advice you render. With this clarity, establishing expert precedent, you might consider your ongoing responsibility for every insurance contract you have ever sold. I realize the DOL has no jurisdiction over insurance sales, but if you subscribe to fiduciary standing as you say, where appropriate, how would you rationalize not having ongoing responsibility for your recommendations? Is it ok to act in the client's best interest except for insurance agents? You are forgetting the Congressional objective of an uniform (as in incorporating the DOL language) fiduciary standard.

You have a long way to go, to defend your position. So far, it is just disparaging me, a good insurance sales practice to disparrage your competitors in your local market in order to win business--not based on objective criteria, just baased on character assignation.

So, why is it again, that you are opposed to acting in your client's best interest? This time, try not to disparage me and just stick to the reasons why the fiduciary standing of the adviser is not a great idea. We all understand insurance agents are not fiduciaries--but is that a reasonable excuse?

SCW

[Bradly T.]

Another example of fantasy and fallacy presented as fact. The DOL is pushing back its definition and will be focused on its ERISA plans....NOT the securities industry which is subject to the Dodd/Frank SEC definition, now pushed back another 1-10 years with Congress demanding that DOL WAIT for the SEC to act (with purse strings in hand). What Winks says can be taken at face value.....as false and misleading EVERY single time, so far without exception. His declaratives and imperatives are as nonsensical as his "logic" and "reason". I love it when people accuse others of their own behaviour...textbook psychosis. And still off subject.


The subject, once again, is about the misuse of journalistic power to hide the truth and avoid the actual story behind headlines fed to editors and "reporters" by those that should be investigated and reported and exposed for their deception, manipulation, and fraud foisted on the media, the constituency/readership, Congress, regulators, and the public. When journalism becomes but a mouthpiece for advertisers' malfeacence, then the journalism becomes a co-conspirator of the fraud and deception. So, FP is being reduced to a pure marketing and deception mechanism by their perpetuation of the deceit.

[Stephen Winks]

Bradley T,

You have yet to understand how all this works together to constitute a universal fiduciary standard.

The SEC's definition of advice must be consistent with whatever the DOL says so it is manageable.

SCW

[Lucullus]

Bradley,

It is just possible that Mr. Winks does not know how appallingly illogical and untruthful his statements are. His citing what he THINKS will be a forthcoming DOL regulation that deals only with ERISA plans as support for his discredited notion that there is a single fiduciary standard that applies to everyone who gives advice under any circumstances is so pathetically lame that I'm inclined to doubt that he understands the issues.

For example, he writes "You are forgetting the Congressional objective of an uniform (as in incorporating the DOL language) fiduciary standard."

WRONG! There's no "as in incorporating the DOL language", except in Mr. Winks' mind.

He's apparently given up his insistence that fiduciary duty ALWAYS requires discretionary authority, as that is so obviously, and laughably, wrong that it amounts to a bad joke. But he still touts "ongoing duty", despite the clear evidence of Dodd-Frank, Sect. 913(g), which modifies Sect. 15 of the 1934 Act to include a new subsection (m) entitled "Standard of Care", with the following language:

"Nothing in this section shall require a broker or dealer or registered representative to have a continuing duty of care or loyalty to the customer after providing personalized investment advice about securities".

How clear does it have to be before Mr. Winks recognizes that the drum he keeps beating has a huge hole in it? Apparently, such a level of clarity is not possible. He's going to beat that drum because he wants to (or feels a need to), and nothing so trivial as a subsection of Federal law that clearly, unambiguously, and incontrovertibly contravenes his argument will make any difference to him.

Bradley, I am fairly certain that Stephen Winks is not being merely consistently disingenuous (and, on occasion, flatly mendacious). This guy has made misstatements so glaringly false, so often - repeating them even after their falsity was demonstrated to everyone with a functioning frontal cortex - that I suspect that he is simply incapable of recognizing that falsity.

We've all see it before. The "Holocaust denier" who insists that millions of Jews were never gassed in those concentration camps and that the overwhelming evidence that they were is simply fabricated. The folks who insist that the moon landings were filmed on a sound stage. "Flat earthers".

The human capacity for self-delusion may well be unlimited. Certainly, Mr. Winks' capacity for continuing belief in propositions that are sheer nonsense is certainly robust. As is his willingness to continue defending those absurd notions, regardless of how clearly the evidence reveals them to be absurd. As is his habit of employing the grossest of logical fallacies -

Example: Mr. Winks defines fiduciary duty as "doing what is best for the client". Fiduciary duty is always what Mr. Winks says it is. You dispute that Mr. Winks' notion of fiduciary duty is appropriate to certain specific activities that you engage in. Ergo: You refuse to do what is best for the client"

You cannot disprove such logic, because the guy who employs it operates under his own definition of proof. And of truth, for that matter.

In short, I am no longer certain that Mr. Winks is deliberately spreading falsehoods. Falsehoods, yes, but he is, I have come to suspect, wholly incapable of recognizing falsity if it's something he wants to believe.

That any financial advisor would employ someone with such a handicap to advise him or her on how to work is a prospect so scary that I don't even want to think about it.

- John

[Bradly T.]

The FPA just announced their own collusion with the "journalistic" conspiracy fraudulently representing the Noncoalition's perversity. Today's digital FPA edition proudly anounces that "over 5200" CFPs signed the so-called petition submitted to the SEC. You know.....if I couldn't get even 10% of a constituency to support an effort, I'd table it or hide it; I sure as hell wouldn't be bragging about it!!! Where's the story FP?? Where indeed. Shame on you and the FPA and Noncoalition for lying and misrepresenting the facts and the motivations behind them. Journalism? I still think not. I hope the SEC can count. Evidently the knuckleheads of the Noncoalition cannot count any better than they can tell the truth.


And Winks - the very first rule when you find yourself in a hole is quit digging!! Your entertainment value far exceeds your rhetorical skills and art of persuasion.

[Lucullus]

Bradley,

I agree, wholeheartedly, with the last sentence of your last posting. He is amusing, to be sure. But I'm done trying to educate the ineducable. Winks persists in making questionable or false claims and later claiming them to be fact, mischaracterizing the positions of his opponents, constructing "logical" arguments that would embarrass Glenn Beck, assuming that his own definitions of concepts are THE definitions, pretending that Joe's argument that Standard A, when applied to situation X, is not appropriate, means that Joe rejects Standard A and refuses to abide by it, etc., etc...

It doesn't matter if he does these things because he doesn't know that they're argumentative rubbish or if he does them deliberately, in the belief that no one else does. Rubbish they remain. But they're not entirely without value. I've used his "sillygisms" to illustrate to my students what nonsense can look like when wrapped in sanctimony.

Have fun with him. I'm likely to be spending less time on this forum in the near future, as I'm trying to finish my book on annuity taxation for attorneys and accountants.

- John

[Stephen Winks]

Lucullus (Why don't you use your real name John Olsen?),

You continue to mist quote Dodd Frank as the sentence you cite refers only to brokers, who we all agree have no ongoing responsibility for their recommendations. There is no misunderstanding as to whom that statement is directed as confirmed by numerous expert commentaries.

You remain so counter to acting in your client's best interest--that the facts don't matter.

You might want to call the SEC for clarification, if you doubt the widely held expert interpretation I cite.

SCW

[Stephen Winks]

Bradley T,

At least the FPA produced 5,500 advisers on a petition in support of fiduciary standing, and your arguement that is not enough?

May I ask how many names are on your petition for brokers and advisers not acting in the client's best interest? That would be NONE.

The fact that you and John Olsen are finding humor in misleading your clients, when you have no intentions of acting in your clients best interests-- John Olsen has even questioned "what ever acting in the client's best interests means"--tells everyone all they need to know.

When you acknowledge ongoing accountability for your recommendations--you can call yourselves fiduciaries. There is no exception for insurance agents and insurance contracts.

The insurance industry must find a way that agents as can act in the clients best interest rather than the best interests of the insurance company. Either you are a fiduciay to the consumer or a fiduciary to a product vendor. We all know which the consumer prefers.

SCW

SCW

[Stephen Winks]

Lucullus (Why don't you use your real name John Olsen),

Everything I cite is defensable, how about you?

I have numerous institutional clients each at minimum of $100 million, how about you?

The advisers I serve, often for free, typically have hundreds of millions (many in the billions), how about you?

I have several patents, how about you?

I am engaged by collaborators of Markowitz who have solved the two principle problems with Modern Portfolio Theory (better use of data, managing uncertainty) utilized by Soverign Wealth Funds and referred to as the worlds best risk managers by Markowitz himself. How about you?

It is interesting that you dispute everything I say from the perspective of an insurance agent, when those at the top of global finance find my views enlightened and have put trillions behind it. Is it me that is misinformed or could it be you?

SCW

[Lucullus]

Bradley,

"Millions". Then "billions". Then "trillions". Golly!

He forgot to mention that he jumps tall buildings at a single bound.

[snicker]

- John

[Bradly T.]

Thank you for further illustrating my point and the facts. Over 65,000 CFPs were sent an "URGENT" email to "sign" a petition by a simple point and click. How easy could it be? But 60,000+ CFPs REFUSED to support this transparent attempt to lobby a government agency in this effort YOU conclude to be vital. Again, support of less than 10% (closer to 8%) SHOULD be a sign to someone - maybe even the press and certainly the SEC - that the Board and their fictitious noncoalition are not to be taken seriously. Especially so after traitorously trying to surrender an entire profession with no shot fired to one element of planning out of a dozen or so, for the sole purpose of becoming an enriched monopoly, while hypocritically and yet unflinchingly claiming to be concerned about the consuming public.


Much like yourself Winks.....you and they share both a motive and a tactic that is embarrasingly transparent to all but you (and them); becoming a laughing stock to any with an IQ above that of a popcycle. But relentlessly persistant in the dogged pursuit of self serving ends...like Woody Allen in Bananas, hoping you don't end up on the ceiling with no chance of any other outcome.



But that is old news.....the Board and noncoalition have exposed themselves and shot blanks far too frequently for far too long to be regarded seriously....even Congress thought so. The real story here is THE PRESS and their participation in this fraud and campaign of misinformation, manipulation, and deceit!!!!!!!! Where are Woodward and Bernstein (or their retarded cousins for pete's sake) or at least journalistic apetite for scandal among the power mongers in our industry? Much as I hate the Street and find the antics of the DC clowns reprehensible....the journalistic irresponsibility demonstrated with this story is beyond the pale.....and indicates a cancer of motives and methods far worse and far more hypocritical than politicians or greedy traders in its effect.



If the noncoalition and their journalistic co-conspirators are the examples of ethics for our industry, the public is cooked for sure. Is it not bad enough every edition of every industry journal is full of articles on millionaire chasing, wooing women, firing small account holders to increase profits, positioning (read pretending) oneself as an expert you are not, using fear tactics to motivate the complacent, et al?? Evidently not. Now there is also an editorial safe-haven for the lies and chicanery of advertisers and event sponsors and the noncoalition to assist them in their nefarious endeavors.



Shameful......and far more important than you or I Mr. Winks.

[Lucullus]

More important than you or I? Certainly.

But more important than Mr. Winks? Gee, Brad, did you forget that he manages hundreds of millions? And advises people who manage billions? Or that people at the top of global finance find his views enlightening and put trillions behind them?

[Stephen Winks]

Lucullus (Why don't you use your real name John Olsen),

I believe you raised the question of competency which is a question of who you serve. How many Soverign Wealth funds do you serve John. Have you ever had a Nobel Laureate confirm your work? You raised the question and are not comfortable with the answers because it raises the question of what possibly could be your point of reference that would have you conclude that insurance agents are somehow immune from being required to act in their clients best interest--routinely required and demanded by institutional investors. The ongoing well being of retail clients in your mind don't count. Do you have any clients or retirement accounts (I'm talking even IRAs) that will soon require fiduciary standing? If you did, none of this would be so foreign to you. The DOL will require in just days that anyone who renders advice to retirement accounts and charges a fee (which you say is your preferred method of compensation) is a fiduciary. This will not be based on John Olsen's opinion, but statute, case law and regulatory opinion letters--a fact you will not acknowledge and have long disputed.

I can understand Bradley's comment as he says he disagrees with everyone on everything. But, you are purposefully misleading the readers of this thread with falaceous information. In the real world governed by laws with which you will soon have to comply, the courts will dismiss off hand your ridiculous assertions. I understand the states regulate insurance, but also understand Dodd-Frank requires a unified fuduciary standard and federal statute trumps state statutes. I also understand that the consumer and your competitors in a free market will soon make it clear that acting in the consumers best interest will trump your acting in the insurance company's best interest everytime. It really is in your best interest to act in the consumer's best interest--something you have said you will do, IF YOU HAD TO. That says it all.

Again, take away disparagement and you have no cogent arguement against the universally obvious importance of acting in the client's best interest. Your tact of reverting to disparagement if you can't win based on merit, will not prevail in a court of law and will not sway public opinion here of any fair minded reader.

Your insurance centric point of reference absolving you of any responsibility for your recommendations is fast becomming obsolete. If you are not uncomfortable, you should be--because you will have to act in your client's best interest.

I know, you are going to disaparage me yet again, could you please try to say something substantive this time. Everyone is getting tired of your bogus self interest/conflict of interest arguement that is only effective if you are against the best interest of the consumer--and who, but you, would want to be on record for that.

SCW

[Stephen Winks]

Lucullus (Why don't you use your real name John Olsen),

I believe you raised the question of competency which is a question of who you serve. How many Soverign Wealth funds do you serve John. Have you ever had a Nobel Laureate confirm your work? You raised the question and are not comfortable with the answers because it raises the question of what possibly could be your point of reference that would have you conclude that insurance agents are somehow immune from being required to act in their clients best interest--routinely required and demanded by institutional investors. The ongoing well being of retail clients in your mind don't count. Do you have any clients or retirement accounts (I'm talking even IRAs) that will soon require fiduciary standing? If you did, none of this would be so foreign to you. The DOL will require in just days that anyone who renders advice to retirement accounts and charges a fee (which you say is your preferred method of compensation) is a fiduciary. This will not be based on John Olsen's opinion, but statute, case law and regulatory opinion letters--a fact you will not acknowledge and have long disputed.

I can understand Bradley's comment as he says he disagrees with everyone on everything. But, you are purposefully misleading the readers of this thread with falaceous information. In the real world governed by laws with which you will soon have to comply, the courts will dismiss off hand your ridiculous assertions. I understand the states regulate insurance, but also understand Dodd-Frank requires a unified fuduciary standard and federal statute trumps state statutes. I also understand that the consumer and your competitors in a free market will soon make it clear that acting in the consumers best interest will trump your acting in the insurance company's best interest everytime. It really is in your best interest to act in the consumer's best interest--something you have said you will do, IF YOU HAD TO. That says it all.

Again, take away disparagement and you have no cogent arguement against the universally obvious importance of acting in the client's best interest. Your tact of reverting to disparagement if you can't win based on merit, will not prevail in a court of law and will not sway public opinion here of any fair minded reader.

Your insurance centric point of reference absolving you of any responsibility for your recommendations is fast becomming obsolete. If you are not uncomfortable, you should be--because you will have to act in your client's best interest.

I know, you are going to disaparage me yet again, could you please try to say something substantive this time. Everyone is getting tired of your bogus self interest/conflict of interest arguement that is only effective if you are against the best interest of the consumer--and who, but you, would want to be on record for that.

SCW

[Bradly T.]

And now he speaks for "everyone"....such a legend....in his own mind. Please do keep ignoring the actual topic of this thread and looking forward to your next "compliment" (I seem to have been dismissed...too unworthy for note).

[Lucullus]

Bradley,

Stephen Winks is, indeed, "a legend in his own mind". "Hundreds of millions" of dollars under management. Advisor to advisors managing "Billions". Then, in a paroxysm of self-gratification, he tells us that his views are relied upon by world financial leaders who have put TRILLIONS of dollars behind them. Financial-planning.com's very own Donald Trump.

More to the point, I have come to believe that he continues to misstate the positions of others (such as his declaration that I have said I would act in the consumer's best interest "if I had to" - a total reversal of what I actually said - and his declaration that you said that you disagree with everyone about everything - which you never said, or even implied) not so much because he does not care about the truth (although he has evidenced little respect for it) as because he cannot distinguish truth from falsehood. Both, it appears, are, in the mind of Mr. Winks, whatever he wishes them to be.

I am particularly taken with his assertion that I am " purposefully misleading the readers of this thread with falaceous [sic] information". Having proven - repeatedly - that he is incapable of recognizing that which is fallacious, he now demonstrates that he can't even spell the word.

While the Glennbeckian quality of Winks' rhetoric has amusement value, it does get old. Being lectured on ethical behavior by someone who persists in attributing to others positions they have not taken while disavowing his own false statements becomes tiresome after a while, even when the sermons are genuinely comedic. The Standard of Care debate deserves better than his inept buffoonery. Or, to be fair, our spotlighting it as such.

- John Olsen (who will continue to employ the screen name of "Lucullus" whenever he wishes, whether Mr. Winks likes it or not)

[Stephen Winks]

Lucullus (Why don't you use your real name John Olsen),

If you are not opposed to acting in your client's best intererst, to include ongoing accountability for all your recommendations to include insurance, then why your counter arguements and why aren't you now?

SCW

[Stephen Winks]

Bradley T,

It's a hundred million per client--with focus on provable, patented institutional services consistent with fiduciary standing.

SCW

[Bradly T.]

Further evidence Winks cannot discern what was said by whom.....even himself evidently. Who's on first?


So, no opinions about the noncoalition's fraudulent representations nor the colusion of this rag and the media being in cahoots in the total disregard of facts and truth?



Read an interesting article in IN Daily yesterday about the media conference by Moranas-Gills of the Board (chief propogandist) whining about the silent majority being unrepresented and falling victims to the insurance industry while bragging about the 5200 "signatures" (point and click) from "concerned" CFPs. Ironically, she failed to mention the 92% of CFPs NOT represented by her urgent petition and plea to every one of us....talk about the silent majority without representation!!!



Evidently, no one is concerned.......and the press remains unaccountable. But never fear.....there's plenty of "news" to come on fund flows (for those of us addicted to being late in the lemming parade), hot sectors, millionaire chasing, small account dumping, all vital issues to financial planners - like the plague of complacency for example. It seems true planners do not have a Board who cares, an association of representation, or a magazine that is actually about planning and its many elements....even our own "industry" has determined we are merely performance chasers motivated by personal profiteering. Kinda sad really.......

[Stephen Winks]

Bradley T,

In order for you to score any points, you must pursuade Congress that it is good public policy for brokers to not act in the client's best interest which would defeat Congressional intent to restore the trust and confidence of the investing public.

After seemingly several years debateing this with you--you have not yet made a compelling case in support of your position other than disparaging me or changing the topic, which is simply avoiding the point.

In the history of man there has never been an instance where the best interest of the consumer has not prevailed in a free market.

We are waiting for you to make a cogent point against fiduciary standing.

SCW

[Bradly T.]

I understand YOU are a one trick pony Winks but it really is you who is off-topic as I've tried repeatedly to point out. Be that as it may, I'm prepared to allow the written record of discourse the past three years to speak for itself. I have been clear, consistant, inclusive, tolerant, and willing to argue any point on its merits. But I've not impressed you. Good. For if an insult from a moron is a compliment, then the consternation of a fool is quite satisfying to me indeed. Adieu.

[Bradly T.]

Exception to tolerance - granny taught me to never suffer fools lightly or tolerate injustice or deception. For what it's worth.

[Stephen Winks]

Bradley T,

Thanks for making my point, you bring nothing substantive, just disparagement.

Is it not an egregious deception that you maintain you are an adviser which requires an ongoing fiduciary duty of care and loyalty to your clients, yet you claim centuries of case law supporting fiduciary standing do not apply to you and insurance sales as you do not acknowledge your ongoing accountability for recommendations, which is essential for fiduciary standing.

The injustice is you and John Olsen have been doing this for years and think you can continue to get away with it, even when Congress has established this is unethical behavior counter to the best interest of the consumer.

Your Granny was wise--you should heed her advice.

SCW

[the observer]

Bradly, John, From Private Wealth Mag this morning:

"An overwhelming majority of full-service investment firm clients don’t know the difference between a suitability standard and a fiduciary standard, or have trouble defining them, a recent study shows... According to the J.D. Power and Associates 2011 U.S. Full Service Investor Satisfaction Study, 85% of full-service clients don’t understand that a suitability standard requires advisors to make only investments they deem suitable for them and that the more stringent fiduciary standard requires advisors to act in investors’ best interest and disclose all conflicts of interest.

Significantly, the study shows that among those full-service investors who currently are in a fiduciary relationship, 57% state that this relationship increases their comfort level with their advisor, while 42% say that it does the opposite."

=======

So CFP Board and the coalition were lying when they said 80% of consumers were in favor of a broadening fiduciary standard, or was it 80% of the of the 15% who understood... and what of the nearly half who feel less comfortable in a fiduciary relationship?

I'm obviously missing something, but I'm sure the troll will further muddy the waters

[Lucullus]

Observer,

Yeah, I saw a report on that study. Those of us who actually do practice in this field (as you do) recognize that it's easy to make flat statements about Standard of Care, but the devil is in the details. The insurance pros I know ALL put the client's interest first - not because they are compelled to by the existing standard of care, but because it's (a) the right thing to do and (b) good business. Those of us who are "dually registered" recognize that when we're acting as insurance agents in the overall context of giving investment advice, the standard that may be applied (and, in my view, should be applied) to ALL of the activities in that overall engagement is a fiduciary one.

Note that I said "A fiduciary one", not the "everyone must act as an institutional portfolio manager, even if they aren't" version that Clueless thinks is now required (no, it's not), or that Congress has mandated (no, it hasn't) and that is appropriate (no, it may well NOT be appropriate, based on facts and circumstances).

Many of us have no problem with holding registered reps and even "insurance only" advisors to a higher standard than is now required. I certainly do not. I tell my students that if their business card says "consultant", or if they hold themselves out as one, or even use wording that a reasonably prudent person would interpret to mean that they are "independent" or "objective", or anything more than a salesperson, they've entered the Fiduciary arena and had better play by its rules.

But to say that we must be held to a standard that includes ongoing duty of care when the specific client/agent engagement does not contemplate same (and, especially, when the client does not WANT it to) makes no sense. To suggest, as Winks has, that the "unified standard" (the term would more properly be "the single standard", as "unified" implies a reconciliation of several elements) requires discretionary authority isn't just dead wrong. It's laughable. As in -

1. All investment advisors are subject to fiduciary duty (a true statement)
2. Some investment advisors are permitted, by their broker/dealers, to have discretionary authority over client accounts and accept such authority. ( a true statement)
3. Some are not and will not. (a true statement)
4. Therefore: Discretionary authority is an indispensible element of fiduciary duty.

Can we say "non sequitur"?

But that's what Winks is arguing, (and he would know that if he were capable of assessing his own musings for what they are). And its logical value is zero. It's not a Syllogism, but a "Sillygism".

This is not, and never was, a debate in which all those not now subject to ANY fiduciary duty flatly reject the application of ANY element of such a duty, even when it makes sense. Speaking for those of us who recognize when we ought to bear A fiduciary duty, I deplore such a simplistic (not to say simple minded) characterization. We do not oppose a "harmonized" standard if it addresses the activities that we actually engage in and imposes duties that are consistent with those activities. We DO oppose the witless notion that someone who sells mutual funds or life insurance and who does not pretend to be a financial planner, investment counselor, etc., must be regulated as if he or she manages client investment portfolios on an ongoing basis with discretionary authority.

You may disagree with some of my positions and/or conclusions. If so, I will be more than happy to debate them with you. I will not debate them with Clueless, who is demonstrably not competent to argue serious ethical issues with adults.

- John

[the observer]

Hi John,

In polling my friends within the Dept. of Corporations Enforcement Division one clear message came through when it came to unethical insurance practices... Their job would be made a lot lighter if they introduced an Iowa style rule everywhere. What CA wants to see is the imposition of a "fiduciary Duty" for insurance agents with no securities or RIA registrations who replace securities with EIA's or FA's. They want this fiduciary duty on the sell side recommendation... I'd go one better and insist that such sales be first reviewed and signed off on by a third party investment adviser before being permitted. That will never happen though. Overwhelmingly (and I've investigated plenty) the abuse seems to be the irresponsible replacement of securities with FA and EIA products among seniors by people who "recommend" the sale of the securities or make negative comments about the client's portfolios to induce them to conclude they need to replace their securities with FA's and EIA's. We could cut 50-70% of abuse in CA if the fiduciary duty applied to the sell side recommendation or inducement, irrespective of registrations. WELL... that said, we can't stop the abuse, no one can stop an unethical person from acting unethically... But, we will be able to better prosecute the abuse and lock up the abuser when we discover it!

I think we may disagree on the issue of insurance agents being fiduciaries to clients. I just do not believe an insurance agent can be a fiduciary to the client and to the insurance company at the same time. It's simply not possible. We're not talking about ethics, or acting in the clients best interests, we're talking "fiduciary". The fix is simple and the cure is actually already there in some States but not in others. The simple fix is to allow ALL insurance agents to be able to obtain and retain their insurance license WITHOUT the need for a company appointment. Those who are appointed would be agents for the company and their loyalty and duty owed will be clear... Those without company appointment would have met State mandated standards for education, licensing, continuing education and would need to have a planner/client contract in writing that spells out the services they will offer for a fee and the recognition that they are fiduciaries to the client because they do not represent insurance carriers. Of course, for this to work, we would have to have a sufficient number of companies offer no-load insurance products and there would need to be supervision and oversight to ensure that licensed fiduciaries didn't double dip and earn a commission on advice they'd already received a fee for. I suggested this 12 years ago in one of my white papers. It's been ignored of course... doesn't make it irrelevant though IMHO.

BTW, I have to understand how one can have an ongoing duty of care with a fixed insurance product... It's a contract executed between an insurance company and a client whereby the company makes all the promises and the agent merely offers to act as a go between. Since when is the insurance agent a "party" to the contract?? If the ongoing care means watching the company to see it's not slipping off the edge and going broke before we can get the money out and to another carrier I'm with you, but what else is there to do in terms of "ongoing care"... call the client and see if their situation has changed... good, but what else??? Don't worry, I won't feed the troll, I just wish you guys would stop!

[Bradly T.]

There was another study recently released that showed that when explained objectively to investor households over twice as many preferred the commission model of comp over the retainer or the AUM fee structure. Which leads to a point about the observer's observation/opinion on insurance agents AND reg reps. Far more insurance is sold today by NON-captive agents working as or for an independent agencies whereby the agent does NOT have ANY obligation to the insurer but rather to the insured. Policies are shopped and compared with multiple carriers COMPETING for the business.


Most funds are similiarly sold. Observer is still echoing Bob V. that receiving commissions taints ethics or expertise as though the commissions earned were from trading activity or proprietary product pushing or shelf bonus/quota distribution. While these still go on, to lump them in with independent product SELECTION AND PLACEMENT commissions is simply an inaccurate inclusion IMO. The amount of such product placement through independent BDs and insurance agencies is proportionally increasing and exponentially displacing the former models - independence + competition = evolutionary progress and market improvements. It is a mistake to blame the child for the sins of its parents - the child will be forced to protect the parent to protect itself. Let's be a little more specific in who does what to whom why.



But I do agree, anyone and everyone selling annuities as investments or replacement of investments needs a far greater licensing and structure than a simple life/health agent license. Too many EIAs have predatory sales practices and misleading and very incomplete "literature" or disclosure requirements and surrender charges longer than client life expectancy and distribution/liquidity restrictions too onerous to bear. This is certainly not true of all EIAs or all agents, but I agree it's a problem gone too long without state's attention. Life and LTC requirements for suitability, disclosure, and liquidity/affordability have been around for a long time. Don't understand how the EIA world gets away with it really.

[the observer]

Bradly,

You're reading way too much into my post here buddy. This has nothing to do with product / commission / fee per se... this has to do with contractual obligations created between the insurance "agent" and the insurance "carrier". Doesn't matter how the agent mitigates his conflicts thereafter. I didn't mention commissions / Fees, only who the contract is created between. An agent without company appointment is able to execute a contract between himself and his client, they are both parties to that contract and obligate themselves to each other and this creates a fiduciary relationship between them. This is not true of an agent with company appointment. Any person executing a written agreement to provide insurance advice for a commission with a client is going to have a devil of a time reconciling his "contractual agency obligations" with any fiduciary duty he contractually agrees to with the client. Certainly, I've never seen such an arrangement in CA. Other States allow this and their regulations are structured to take account of such relationships, but that's part of the problem we all face when discussing this on a nationwide basis when the State laws are inconsistent and so different. I don't echo Bob V's sentiments and never have, I've always opposed his views openly and still do.

[Bradly T.]

Apologies for misunderstanding and the misassociation both. I do not understand the insurance side of the business to the degree I do the indie distribution side. My BD is an agency. I do need company appointments to place product and see no need for it either; an arachaic and ineffective way to control or influence agents distributing their products now perhaps but from a time of almost exclusive captive distributions and agents. In my state no appointment is needed to get licensed but every company requires one to sell their products.


Must confess I really don't know much about EIA's structure either but read a recent article about index life wherein author explained the need for annual reset of caps and participation rates due to the repurchase every year of the futures contract at a variable price based on risk free rates + futures cost structure (I was certain this was just another way to screw clients - wrong again, although it certainly opens the door for the insurer misuse, it's an important element to the contract). But this did convince me even more strongly that anyone selling these devices should certainly be subject to a prospectus and securities license.....some client money is invested in a security and the interest credited is subject to the performance of that security.....there's simply nothing FIXED about it - lots of moving parts and variables and risk to interest credited and NOT a function of the insurer's general account or its underlying portfolio like a true simple interest FA.



So how do we move to agent of client vs. agent of issuer? Do you think on-going compensation is a fundamental element of on-going obligation? So long as compensation is received shouldn't the agent or rep have an obligation to the source of compensation? All true professionals support the intention of protecting clients from the unscrupulous and the incompetent of any and every discipline. Indeed, I have severe criticism of many so-called fiduciaries as I take a great many of their clients and accounts due to a total indifference to the financial circumstances and priorities of the client, focusing exclusively on a pocket of money without context to the client. While many fiduciary forms must act holistically on the behalf of beneficiaries, etc., I see no such evidence of that with managed account "fiduciaries". Even when acting as a rep, I know my clients and apply planning and on-going reviews and strategic adjustments to their total situation, thereby performing the (or many) duties of a fiduciary. I'll put my process and results up against their's any day of the week. I maintain both sides of this - reps and advisors - have some serious issues for review and change regarding their true duties to their clients - regardless of form of compensation - and certainly advisors have plenty to atone for and improve upon.

[Stephen Winks]

You might be interested in knowing the JD Power survey did not ask any pointed questions differentiating sales from fiduciary standing such as:


1. Do you prefer your adviser to act in your best interest in making recommendations or their best interests or that of the product company/service company they represent?

2. Do you think your adviser should have ongoing accountability for their recommendations, or that the adviser should be absolved of any responsibility and any accountability after their sale is consumated and the adviser is paid?

3. Do you know if your broker is charging as much as five times more for the same investment mandate as advisers. Do you think your broker/adviser should manage cost on your behalf in your best interest or that advisers should have no obligation to disclose cost or to act in your best interest?

4. Do you think advisers should disclose their compensation so their economic incentives in decision making are clear?

5. Is your adviser making recommendations in the context of all your holdings so it is possible to determine if they increased the return, reduce risk, enhance the tax efficiency, liquidity, cost structure of your holdings as a whole? Or, are they selling a series of disjointed unrelated transactions where it is not possible to know whether value is added?

6. Do you know if you choose not to follow the recommendations of your adviser, you let them off the hook for accountability for their recommendations?

7. Is your broker/adviser compensated based on sales or their ongoing investment and administrative counsel on your behalf in your best interest?

8. Is your adviser actually charging an ongoing advisory fee but is not accountable for their recommendations?

9. Do you understand whether the actual returns you achieve net of product cost, account fees and charges are commenserate with the risk you are taking.

8. etc. etc, etc.



Would you have us believe that the JD Power survey found that consumers prefer their adviser/broker NOT to act in the consumer's best interest?



JD Power does surveys to deliver results their sponsor's pay for. Any objective research would tell you consumer's want their broker/adviser to act in the consumer's best interest, not the best interest of the guys who bought the JD Power survey.



SCW

[Lucullus]

Observer,

While I agree with you that many abusive sales of index annuities are made by unregistered agents, the problem does not, in my view, require "signing off" on the annuity sale by a registered investment advisor. The existing rules in many states already require that the agent who recommends the purchase of an index annuity with funds from a security be securities licensed, if not registered as an investment advisor. That said, the agent who doesn't actually put that "sell recommendation" in writing, but merely makes negative comments about the existing securities position may be hard to censure under existing rules.

I recall suggesting to the Insurance Commissioner of the State of Missouri a few years ago that he ought to lobby for a rules change that would require any agent sellling an index annuity to be a registered representative, not because index annuities are "securities", but because selling one requires a lot more expertise than selling other fixed products. Since then, I've revised that: Establish a new licensing level - index annuities - which requires passing an exam a LOT tougher than the insurance exam.

As for your belief that an insurance agent cannot be a fiduciary, there are state court decisions that have held the opposite. Usually, they involved property/casualty BROKERS, but some cases that a law professor told me about held that a life insurance agent could have a duty to the applicant which trumped the agency duty to the insurer. They did not, to my knowledge, hold that that former duty was that of a fiduciary.

I do not agree with you that only a registered investment advisor has any business giving advice regarding securities. I believe that the "broker/dealer exclusion" (which the SEC Staff Report recommended be retained and not repealed) makes some sense. There are discussions about the security being recommended that are, in fact, "wholly incidental" to the sale, but I would not oppose making the dimensions of same a LOT more clear and defined.

I agree with your argument that application of a fiduciary duty - much less, the absurdly bloated version favored by Clueless - to the sale of a fixed life insurance policy makes no sense. It's usually a SALE OF A PRODUCT, not the implementation of "personalized investment advice".

One thing that REALLY bothers me about the position that some have taken, with respect to a "unified fiduciary standard", is the notion that fiduciary duty includes the duty to recommend "the best product". It's unworkable, for at least three reasons:

First, the notion that anyone can, in comparing different types of products (such as term, UL, WL, and VUL) and come up with "the best", betrays a very poor understanding of how those products work and the jobs they're designed to do.

Second, "best", to many critics, translates to "least expensive", which is a notion that DOES NOT apply to life insurance policies. As anyone who knows anything about how UL and VUL work, the lowest premium may well produce the WORST outcome.

Third: Even if the first two reasons were moot, how can one demand that an advisor recommend a "best" product, from all the ones out there, when (a) that advisor cannot possibly know all those products and (b) even if he did, he might be contractually unable to sell many of them.

These facts elude those who think that premiums are a measure of value, in a life insurance policy. They're not. My friend, Dick Weber, has exploded that myth in several of his books.

I truly appreciate your participation in this discussion thread, my friend. We may disagree. We do, on many issues. But when you argue, you do so with evidence and logic. Bradley does too, of course. Which is why I enjoy debating these topics with both of you.

John

[Stephen Winks]

So John, your conclusion is ongoing responsibility and accountability for recommendations applies to everything but insurance products and agents?


Best product recommendation is determined in the context of the consumer's other holdings, goals and objectives, client directive and professional imperative. Under the suitability standard to which you subscribe, cost is immaterial, your compensation is immaterial and there is no professional imperative to act on behalf of your client in their best interest. This is why you are puzzeled with the phrase "in the consumer's best interest" as you have observed, "whatever that means."



Acting in the client's best interest means being held to the fiduciary standard of care based on objective, non-negotiable, fiduciary criteria of statute, case law and regulatory opinion letters which you have deemed as being "my uninformed opinion, humorous and ridiculous" when it is in fact a matter of law. This may be why you are perhaps not enamored with being accountable to the fiduciary standrad of care.



SCW