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Barney Frank puzzles crowd on his fiduciary stance at TD summit -- as questions from Skip Schweiss and advisors expose his haziness on the RIA structure and soul

The namesake of the Dodd-Frank bill seems to buy into a suitability approach as a gold standard for financial advice

Thursday, June 13, 2013 – 6:02 PM by Dina Hampton
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Barney Frank (r.) with TD's Skip Schweiss: We can’t confuse people who are already confused.

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Mentioned in this article:

MarketCounsel | Hamburger Law Firm
Consulting Firm, Compliance Expert, Legal Services for RIAs
Top Executive: Brian Hamburger

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RIA Serving Endowments/Foundations
Top Executive: Brent Brodeski, CEO




Bill Mullen

Bill Mullen

June 13, 2013 — 7:22 PM

Who is it that believed that Frank had a fiduciary image?

Bill Mullen

Bill Mullen

June 13, 2013 — 7:23 PM

Who is it that believed that Frank had a fiduciary image to tarnish?

Brooke Southall

Brooke Southall

June 13, 2013 — 7:26 PM

Bill,

I suppose there are better authorities than me. But I thought he was the guy standing up to Wall Street on behalf of the consumer.

http://www.riabiz.com/a/1804006/as-house-and-senate-talk-compromise-barney-frank-hints-at-a-win-for-fiduciary-advocates

Brooke

Stephen Winks

Stephen Winks

June 14, 2013 — 12:08 AM

Doersn’t it all boil down to the exercise of power, regardless of merit.

If that is the case, then the fiduciary battle has to be one at the advisor level where fiduciary standing is easily contrasted with commission sales.

The advisor wins big, despite an industry lobby designed to project power but not to prevail on substance.

SCW

Mike Byrnes

Mike Byrnes

June 14, 2013 — 1:40 AM

I agree that there is confusion between the suitability standard of broker-dealers and the fiduciary standard of RIAs.

Those outside the industry do not fully understand — Mike Byrnes, President of Byrnes Consulting, www.byrnesconsulting.com

Elmer Rich III

Elmer Rich III

June 19, 2013 — 8:48 PM

What other industries do when they are introducing a new business concept is formally educate policy makers, staffs and information sources like Think Tanks. We have been involved in this work for defined contribution plans and more. Any effort needs planning, funding, execution, etc.

It’s called “lobbying.” Don’t think there is a way around it. Policy makers and their staffs will not will not learn about our industry thru the mass media or casually.

Stephen Winks

Stephen Winks

June 20, 2013 — 1:42 AM

What Jack Welch (America’s most capable manager) or Steve Jobs, who are indisputable market leaders, would do is to change the rules through disruptive innovation and win market massive share. They wouldn’t care a twit if their competitors could not adapt or figure out how to compete on the basis of value proposition, price or innovation. This is not a social experiment, it is raw free market forces at work.

The brokerage business model is so broken, it is simply a matter of market leadership in the consumer’s best interest. The excuse of feining ignorance is simply self selecting not to compete. This has never been a policy maker consideration, it is about a massive leadership vacuum in the industry.

No permission is needed. It is simply a matter of dioing the right thing. If the industry does not know the right thing to do—it is a question of technical competency and whether there is sufficient integrity and honor for the industry to be relied upon to do the right thing as defined by statute, case law, regulatory opinion letters and 800 years of common law..

It is terribly disappointing that the industry has to wait for some entity to tell it what to do.

SCW

Brooke Southall

Brooke Southall

June 20, 2013 — 6:17 AM

Steve,

I’m not sure the industry is waiting. But it seems reasonable to care whether the rules governing care of investors are good ones or not in any case. Having your life savings mangled by an advisor isn’t the same bad experience as getting sold an unslick smartphone, is it?

Brooke

Stephen Winks

Stephen Winks

June 20, 2013 — 2:15 PM

Brooke,

You make my point. The rules are already in place. If they were not, you and our friend Elmer would have a point. The industry simply chooses not to play by the rules and wants to play by rules of their own choosing. Fiduciary duty has been around for centuries and has been refined greatly in recent decadfes so there are no mysteries.The issue is why are retail investors not accorded the same consumer protections of other investors?

This is not complex at all, unless you are a brokerage firm willing to negotiate away consumer protections in the industry’s best intetrest.

Naturally, the industry must adapt, but not at the expense of the consumer. What is occuring here is a rationalization of why what is one investors best interest not in the best interest of another investor. When put that way, the industry has no defense. This is why the consumer, the advisor and the broker have lost faith and trust in the industry’s ability to do the right thing, based on statute, case law and regulatory opinion letters.

What a mess exacerbated by a willingness of regulators (FINRA and the SIFMA) turning a blind eye to the best interests of the investing public which they are charged to protect. They simply put the industry’s best intetrests ahead of that of the consumer. There is no queastion about this and ample supporting proof.

The role of the financial press is to inform the consumer of these issues so public policy for the greater good can advance on be advanced on behalf of consumers who have no voice and advisors who have a duty of loyalty to the consumer.

SCW

Elmer Rich III

Elmer Rich III

June 21, 2013 — 10:31 AM

If RIAs individually, or as a group, want to become part of a narrative or change a narrative it will take open and honest conversations with people other than other RIAs/providers/industry insiders or the general public.

It will take conversations with policy makers and people in the places where important narratives are created and maintained. No way around it.

Standing outside of those circles and preaching, moralizing or scolding/behaving angry will just alienate the people RIAs need to have conversations with. Productive conversations require strong articulation and defense of one’s positions but they are not sales pitches. Listening to other perspectives is the biggest part of any useful conversation.

Stephen Winks

Stephen Winks

June 21, 2013 — 1:40 PM

Elmer,

What a wonderful world you describe—it presumes the brokerage industry will listen, it presumes the SIMFA and FINRA , both brokerage institutions and regulators, will act in the consumer’s best interests counter to their primary service constituency, it presumes the SEC and the DOL have the political will to actually protect the best interests of the investing public—which is our hope with no assurances.

I would love to live in that world but it is a figment of your imagination that does not exist.

Fiduciary standing of brokers is not a negotiation, the broker is either a fiduciary or not. What you describe is a negotiation.

It is time for leadership. Listening has been exhausted for well beyond two years since the passage of Dodd-Frank. The retail investor has inferior consumer protections relative to other investors. What would you suggest, listen more?

What an abysmal display of industry leadership—after all they can simply get away with just listening, right? No semblence of the consumer’s best interests even being within the realm of consideration after two years of listening. Elmer they ought to put you in charge of the talks with the Taliban on Women Rights. No action required, just talk, right. Pretty Naive.

SCW

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