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
This is clearly contrary to the SEC’s consumer-protection mandate, but completely consistent with the possibility that if the
Meanwhile, at congressional hearings, carefully selected witnesses tout the benefits of FINRA oversight of the RIA community. At a recent MarketCounsel conference in
'MOST OF THE MONEY’
I think our present situation was captured best when
We have a tendency to focus on our own little battles, but I would invite you to consider the bigger picture around the profession’s particular lobbying challenge. We live in an environment (regulatory and congressional) where it is possible for any organization to siphon large profits from the general public — by having the regulators create guidelines that allow what an objective observer might consider sleazy behavior or by lobbying
Frank noted in his presentation that he was surprised to discover that much of what
In a broader sense, these lobbying victories have given various industries the right to pollute the environment rather than engage in expensive cleanup or retooling activities; complex and onerous regulations on smaller competitors (FINRA, anyone?); specialized tax breaks; the right not to disclose hidden costs, fees and sales incentives; relief from consumer protections; and the right not to be sued (or to force people into an arbitration system that you control).
Lobbying expenses and campaign contributions usually amount to pennies on the dollar collected from the activities regulated into legality. So it makes great business sense, from a bottom-line standpoint, to invest in anti-consumer legislation; and it makes great sense for politicians and regulators to accept the largesse to further their own careers.
I don’t think it takes a lot of imagination to see that these perverse incentives, spread over every profession and industry, can have a visibly perverse impact on our economic system as a whole.
We can see the damage to consumers and consumer-loyal professionals in our own little corner of the landscape. Imagine the same damage routinely spread across the rest of it, with many others fighting the same losing battle with nothing more powerful than “right” (loosely defined as a concern for consumers and the general public and a fair economic system) on their side. Now you begin to realize the size of the challenge we face as a society.
What can we do about this? I’m beginning to think that our profession can’t win its battle against
I would like to see the organizations fighting for a fiduciary standard reach out to groups and organizations that are fighting similar uphill battles everywhere else in our economy, and start cooperating with each other on what we might call the Bigger Fight. We want and need their support, and I’m pretty sure they want and need ours. If all of these groups addressed this Bigger Fight in concert, we might be able to muster the collective resources needed to save our economic system.
Initially, I think this would take the form of informal meetings, helping different groups realize that broader cooperation may be their (our) only chance of success in our respective uphill fights. In those meetings, we would identify the various Davids and Goliaths, and reach out to a broader subset of Davids.
Then the fun begins. Every group has press contacts and grassroots organizations. Each group would outline the fight, showing that all these individual battles are really part of a bigger picture, and describing the dangers of allowing regulations, loopholes and legality to be purchased for pennies on the dollar. Help people understand what’s at stake, and connect the issues that directly impact each group with a lot of other issues that are affecting them in ways they don’t realize.
This might also motivate journalists to publish lists of regulators who have moved on to cushy industry jobs after a career defined by leniency toward those very same industries. We might be able to gather a collective list from all the different government agencies, and I’ll bet it would be eye-opening to those of us who might think it only happens in our corner of the world.
A list like that (and the outrage it would generate) might spur legislation to ban the obvious forms of regulatory capture.
Meanwhile, some organizations may be more politically astute than ours. They can guide the financial planning/RIA profession in how to get the grass roots involved. They can also help motivate constituents from different organizations to weigh in on our issues. Imagine what our lobbying efforts would look like if we had tens of thousands of members of other groups contributing letters of concern to their politicians. And, of course, we would reciprocate.
The overarching goal would be to reform how we elect our representatives in
If we all had a comprehensive list like this, we might be inclined to vote differently than we do today. And I think that financial planners/RIAs would be especially valuable to the group, because many of you might be inclined to share this list with your clients — multiplying your effectiveness.
I may be dreaming here, but it’s possible that if all the groups make enough noise about these issues, the voters might demand real campaign finance reform, perhaps even lobbying reform.
My sense is that the U.S. political and economic system may be near an inflection point. We can keep going down a path that might plausibly lead to compromised fiduciary standards — with
Or we can find allies, assembling the coordinated heft to fight back against the interests that are so easily defeating all of us fighting for consumers in isolated, divided engagements. This is a battle we simply cannot win alone. I pray that we can win it together.
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