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Why FINRA's power grab for RIAs needs to be stopped to avert the death of the profession, Part 1

Looking back from the year 2025, the author recounts how FINRA seized regulatory control and crushed the life out the once-thriving RIA channel

Author Guest Columnist Ron A. Rhoades May 30, 2012 at 4:37 AM
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Ron Rhoades: FINRA was already an expert at protecting its large Wall Street firms from competition.

Elmer Rich

Elmer Rich

May 30, 2012 — 4:43 PM

We are all in this together. These are immensely complicated matters — unprecedented in fact.

Not sure what a combative approach and demonizing/finger-pointing and draggin out the other guys unprofessional behavior helps problem-solving.

Now if Russo is posturing to win points — fair enough. The people that elect him need to be placated. Fear is always the best motivator and attention getter. Slamming the other guy works real well too.

However, rhetorical tactics and moralizing derail real problem solving. Russo and his supports need to chose.

BTW, as hard headed marketers, our experience is the more regulation the more comfortable clients are and the faster the business grows. More regulation has always correlated with financial services growing. May not be causal but professionals understand more safeguards are needed as any industry grows, of course.

Ron Rhoades

Ron Rhoades

May 30, 2012 — 6:17 PM

No one denies that the SEC needs more funding, and a wiser exam strategy. But putting FINRA in charge of RIAs creates 1,000 problems as it purportedly tries to solve one.

Putting FINRA in charge of RIAs is like putting ENRON in charge of CPAs. It’s like drug companies setting the rules for your family physician. On so many levels, it’s just nonsensical.

Stephen Winks

Stephen Winks

May 31, 2012 — 4:18 PM

This is a fight for the Trust and Confidence of the investing public where there is no counter arguement in public policy where literally the assurance of the best interest of the investing public is the purpose of investment policy.

When it is so clear that FINRA (formerly the National Association of Securities Dealers) has been the benefactor of the brokerage industry where the broker is officially neither accountable nor responsible for their recommendations

Stephen Winks

Stephen Winks

May 31, 2012 — 11:56 PM

to finish my comment….

, how can FINRA be considered an advocate for the consumer’s best interest in advisory services, when the brokerage industry’s interest are counter to that of the advisor ?

If it is true that no one in Washington expects the SEC to receive further funding, wouldn’t the bureaucracy then have to do more with less (which implies management skill) thus interjecting the need for modernity which assures a better regulatory outcome at a lower cost ? If so, then an expert authenticated prudent process that assures compliance to fiduciary standing at a fraction of the cost of present day compliance (10% to 15% of gross industry revenues) answers the perplexing questions of the cost and effectivenes of regulation.

Ron Rhoades as NAPFA President has a platform from which to make it clear that FINRA has no idea of how advisory services can be more effectively regulated at a far lower cost than even that envisioned by the Boston Consulting Group.

By raising the question of FINRA accountability for cost and effectiveness, there no case to be made for FINRA as an advisory services regulator. FINRA’s own people acknowledge, if FINRA does not regulate advisory services, its reason for being is significantly narrowed rather than exponentially expanded.




June 3, 2012 — 6:31 PM

Ron is not overstating the potential dangers to our economy and values if this legislation is passed and the trend of the Wall Street/Washington, D.C. relationships continue.

Elmer’s comments are interesting but keep in mind that FINRA has countless regulations. Virtually all are in their favor and, by design, very complicated to minimize fighting back.

Steve is correct in that it is a fight for Trust and Confidence. FINRA/NASD’s structure has never offered either, and most of its current and former leaders simply use those terms for marketing purposes.



October 14, 2013 — 11:15 AM

Just at this time, heavy water fog, suddenly on shrinking, all incomes inside that figure body, rear a Gao Da Dun Shen’s form.

Elmer Rich III

Elmer Rich III

October 14, 2013 — 4:23 PM

More of a risk seems the lack of succession planning in an industry where “life-style” practices are the norm.

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National Association of Personal Finance Advisors
Top Executive: Geof Brown, CAE

Financial Planning Association
Top Executive: Lauren S. Schadle, CAE, Executive Director and CEO

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