Updated Tuesday, July 7, 2015 as of 4:06 PM ET

How Independent Advisors Can Beat Wall Street

We now are facing the threat of a compromised fiduciary standard that will allow brokerage firms to conduct business as usual. We have seen the SEC issue reports that openly talk about accommodating the brokerage industry’s business model.

Get access to this article and thousands more...

All On Wall Street articles are archived after 7 days. REGISTER NOW for unlimited access to all recently archived articles, as well as thousands of searchable stories. Registered Members also gain access to exclusive industry white paper downloads, web seminars, blog discussions, the iPad App, CE Exams, and conference discounts. Qualified members may also choose to receive our free monthly magazine and any of our daily or weekly e-newsletters covering the latest breaking news, opinions from industry leaders, developing trends and growth strategies.

Already Registered?

Comments (5)

I think that you may finally have woken up and realized that it is a societal issue, one in which the public accepts things that are legal as being right. That should not be the case. What I find fascinating is that for such a long time you have been advocating the universal fiduciary standard, as it applies to assets, and of course AUM, and totally ignoring the fact that most people probably need to be protected more on the liability side (debt) and in ordinary transactions.

Perhaps you need to engage one of the senior members of the SEC in a secretly recorded conversation, similar to the one you conducted with that poor Schwab rep, and find out how they really feel.

Anyway, broaden your market away from simply those managing assets and perhaps you will enjoy more victories.
Posted by Consumer A | Thursday, April 24 2014 at 9:07AM ET
What is truly ironic is that you quote Barney Frank in the capacity of someone lamenting the moral bankruptcy of the system when he did so much to cheerlead the government intervention that produced those toxic loans in the first place. Why? Mr. Frank's motivations and the government system that put him, of all people, in a position of lording over the financial disaster he helped create speaks volumes about the fatal flaw in our system that you are concerned with. If we want better behavior from the private sector let's start by demanding, and holding accountable, those we send to Washington to represent the "public interest".
Posted by Rich J | Thursday, April 24 2014 at 9:54AM ET
Excellent insight Bob. As a securities attorney, I find satisfaction in knowing that in many cases, brokers can still be legally held to a fiduciary standard, even on non-discretionary accounts, when the customer lacks the experience, knowledge and understanding to independently evaluate their broker's recommendations.
Posted by James W | Thursday, April 24 2014 at 12:50PM ET

With the lobbyist having more money and influence to effectively control congress and its control over Federal regulators and agencies, the only resource we have to move "the argument which is in the right" is a free market fiduciary solution which can not be thwarted by brokerage self interest. If advisors are given the option the consumer will definitely prefer a far higher level of expert counsel (which is both accountable for the recommendations and the fulfillment of ongoing fiduciary duties) in the consumer's best interest, especially at a lower cost to the consumer than expensive advice products. if the consumer only knew how they were taken advantage of. It would be impossible for the brokerage industry to answer in kind since it does not acknowledge or support advice.

Since the introduction of Adam Smiths "invisible hand' in 1776, there has never been an instance in a free market where the consumer's best interest not been served. We are now at a point that advisors have achieved critical mass and thus afford self determination of the enabling resources to constitute all the enabling resources to support fiduciary standing. Advisors have no cultural inhibitions that prevent the advancement of (a) prudent process with an audit path to confirm statutory authority which makes acknowledgment of advice safe, (b)advanced technology that drives a more modern approach to portfolio construction, (c) work flow management and resourcing tied to a functional division of labor (advisor, CIO, CAO) which makes advice scalable, easy to execute and manage as a high margin business at a lower cost to the investor/consumer, (e) conflict of interest elimination not disclosure which only perpetuate conflicts of interest.

We are very close as an industry to either rendering conventional brokerage obsolete or making it in the enlighten best interest of the brokerage industry to adapt. Only when there is a lower cost, far better advisor value proposition that supports professional standing for the advisor which compensates advisors better than brokers expensive packaged advice products is there a reason for the brokerage industry to assume fiduciary liability as when RIAs advance such a full fiduciary option, brokerage interest have no choice but to adapt.

So the ball is now in the court if the advisor to make their case in the fee market. Vendors leave your egos at the door as an inexpensive end to end comprehensive solution is required.

Posted by Stephen W | Thursday, April 24 2014 at 6:34PM ET

To quote Barney Frank on any level defending your position immediately puts you at a disadvantage. Advisors choose independence for a variety of reasons, many starting at brokerage firms. Rarely is the move about money/compensation. It is usually based on the advisor feeling he can serve his client base, without the overhead cost and pressure to "sell" them product.

I admire your passion, but feel you are wasting your energy trying to fix this problem. I agree with the previous responder. Let the free markets dictate. You dance with the devil when you promote additional regulation by administration appointed agencies.

Posted by DAVID B | Friday, April 25 2014 at 9:33AM ET
Add Your Comments:
Not Registered?
You must be registered to post a comment. Click here to register.
Already registered? Log in here
Please note you must now log in with your email address and password.

Already a subscriber? Log in here