RIA advocates cry foul after international media pick up on U. of Chicago study labeling shady stock brokers as 'investment advisers'
Investment Adviser Association issues urgent press release; authors offer defense that Brian Hamburger finds hard to swallow
Charles 'Chuck Schwab' called James Gorman to protest a two-broker poach, kicking off a hydra-headed legal battle, costing Morgan Stanley millions, so far
The Schwab founder and chairman invoked Charles Schwab Corp.'s zero-tolerance policy against Wall Street -- or RIA -- poaching of talent and AUM from Schwab branches.
March 9, 2023 at 1:23 AM
Why FINRA's late appearance into smoothie-throwing broker James Iannazzo's life might be rough
It's been about 11 months since Merrill Lynch fired him, and the CFP Board stripped him of the CFP mark; attracting the SRO's attention means more woes.
December 29, 2022 at 1:05 AM
MarketCounsel | HamburgerLaw
Compliance Expert, RIA Set-up Firm, Regulatory Consultant
Top Executive: Brian Hamburger
Compared to doctors, consumers seem to be much happier with the service and outcomes delivered by financial advisors. Your article says, “the study shows that one in 13 “financial advisers” or brokers (as RIABiz and industry defines them) have a misconduct-related disclosure on their record.” That’s extremely low compared to doctors who have been sued for malpractice. Quoting an ABC news article from 2010, “More than 60 percent of doctors over the age of 55 have been sued at least once, according to a new survey by the American Medical Association (AMA).” Source: http://abcnews.go.com/Health/HealthCare/malpractice-lawsuits-doctors-common-ama/story?id=11332146. So while the numbers in our industry may look bad, we’re pristine (although we can still get better) compared to doctors.
The difference between brokers and advisors is not quite as abstract as imagined. Clients easily understand that brokers work in a cost structure where 40% of their earnings on retirement savings are lost to brokerage fees, commissions and administrative cost as brokers under a suitability standard do not have to act in the client’s best interest. Brokerage fees, commissions and administrative cost are treated as a profit center in the b/ds best interest while advisors treat these cost as cost centers to be minimized in the client’s best interest. B/D cost structure only allows the client to achieve 60% of the earnings on retirement savings. If 90% of the earnings on retirement savings were to be realized, b/ds would have to cut brokerage fees, commissions and administrative cost by 75%. This is why the SIFMA and FINRA are against fiduciary duty and why self regulation does not work. FINRA (formerly the National Association of Securities Dealers) and the SIFMA (formerly the Securities Industry Association) are still acting as brokerage industry advocates rather than regulators charged with protecting public trust. The brokerage industry’s interest are advanced at the expense of the best interest of the investing public crippling innovation leading to controversy concerning brokers acting in the client’s best interest. Of course the best interest of the investing public should prevail.in a free market, yet the brokerage lobby (the SIFMA and FINRA, etc.) is doing everything in its power to assure no advice is rendered by brokers from which fiduciary liability is incurred by the b/d. The consumer and the advisor get this, thus the massive competitive edge enjoyed by fiduciaries acting as RIAs.
I think that all savers with money to invest should have a healthy distrust of all who work in the financial “services” industry. Never blindly trust. Always have your antennas up and your suspicion meter on.