Buyer beware: where is the SEC?

Read this to understand the dynamic of how large scale firms represent, or mis-represent as the case may be, their practices: Brokerages Pull Back on Fee Label  (excerpted below):

The two largest U.S. retail brokerage firms as measured by client assets have told their financial advisers who hold the certified financial planner designation to not promote their businesses as "fee only."

The directives followed reports that hundreds of brokers were inaccurately describing themselves as fee-only on an industry standards group's website.

Under rules that the Certified Financial Planner Board of Standards Inc. recently clarified, advisers who have the CFP designation and work for brokerages whose business includes commissions cannot call themselves fee only. 

 Last week, Financial Planning magazine and The Wall Street Journal reported that hundreds of them, from firms including Morgan Stanley, MS +0.89% Wells Fargo & Co WFC +0.44%, Bank of America Corp. BAC +0.72% and UBS AG,UBS +1.54% among others, were doing just that on the board's website...

The classifications as "fee only" occurred on the website of the Certified Financial Planner Board, and the Certified Financial Planner Board of Standards are such that "fee only" is appropriately used only when all the advisor's compensation including that of any related parties come from client fees. The standards are very clear.

The website is regularly used by consumers who are looking for "fee only" advisors as opposed to those who take receive sales commissions or other emoluments from providers or distributors of investment products.

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So it appears we have major firms constructively and widely misrepresenting their compensation practices in public advertizing. Is this what people used to call fraud? 

Update on Monday, October 7, 2013 at 08:59AM by hb

The business model called to mind a seperate, but related story earlier in September. Wells Fargo Hires $1B Morgan Stanley Broker Team - "They previously managed more than $1 billion in client assets and their annual production in fees and commission was roughly $5.8 million, according to Wells Fargo." We invite the reader to comptemplate what impact fees and commissions of $5.8mm might have on specific product recommendations.