On the fiduciary rule

WWB strongly supports this position.

Regulations that facilitate conflicts and transacting under an overly complex body of regulation combined with poor but legalesed disclosure are what caused the problem. Together they enable, effectively, a regulatory safe harbor for operating under false color.  Its not complex... but gets so when regulatory capture holds the day. And that's where we are. 

"I do not believe a broker can act as a fiduciary to an investor seeking advice for his personal investments for one simple reason – he can’t serve two masters. A broker already owes a fiduciary duty to his client. It’s just that his client is not the public that buys his wares; his client is the issuer of securities, companies, municipalities, mutual fund companies and other investment product manufacturers. And frankly, Wall Street is already failing at fulfilling this duty. Any IPO that has a large pop on the first day of trading is a failure of the brokerage underwriter to meet his fiduciary duty to his client. What is needed is more education, not a blurring of the lines between advisers and brokers."

The Fiduciary Rule Educates The Public

LPL Financial No Longer Claiming to Be ‘Conflict Free’

Investors take note. This is a big deal. We've always encouraged investors to read & understand the fine print of advisory & brokerage agreements, particularly disclosure of conflicts. Of course, many have been written in legalese so as to obscure, if not misrepresent, the substance. The fog of advertizing under false color is slowly receding and with significant consequences for conflicted business models. And more will follow.  This from today’s WSJ LPL Financial No Longer Claiming to Be ‘Conflict Free’ .

“LPL Financial Holdings, the Boston-based independent brokerage, is moving to prevent its affiliated financial advisers from claiming they are “conflict free.”

On Monday LPL removed those words from its web site following a story in The Wall Street Journal showing that some advisory firms claim to be “conflict free” on their public websites even though they also list numerous potential conflicts in their disclosures to government regulators.

LPL also asked its advisers to review their websites “for any use of that language and address the concerns that have been raised,” said a spokeswoman for the firm...

LPL’s regulatory filings disclose several conflicts, yet a Journal analysis found that the websites of approximately 70 LPL advisers asserted they were conflict free. As of last week LPL’s own website said the firm’s “objective research” enabled advisers to “provide conflict-free advice and guidance.”

Now one wonders if any of LPL's or its advisors' prior disclosures were misleading? What changed from an operational or policy perspective? One suspects nothing but sunshine. No doubt litigators will sort that one out.

The duty of an advisor vs a broker operating under color of defective & misleading regulation

This is a huge issue, and most investors are unaware of it. It is driven by the best regulation that money can buy... and did.

"many financial professionals who hold themselves out as “trusted advisers” are legally allowed to recommend investments that pay the adviser more while exposing investors to higher costs, greater risks and poorer performance than available alternatives."

The Document You Should Ask Your Advisor to Sign

Update on Monday, December 21, 2015 at 06:42AM by hb

How timely.

J.P. Morgan to Pay $307 Million Over Client ‘Steering’

Update on Wednesday, December 30, 2015 at 07:44AM by hb

Barclays Capital Settles Allegations of Unsuitable Mutual-Fund Switches

"Barclays Capital Inc., a unit of British bank Barclays PLC, will pay $13.75 million in fines and restitution to settle allegations that its former U.S. wealth and investment-management unit failed to prevent thousands of unsuitable mutual-fund switches in customer accounts "

WWB comments on DoL's Proposed Conflict of Interest Rule

Watson Wilkins & Brown, LLC, submitted formal comments to the Department of Labor on it's Proposed Conflict of Interest Rule.

Although the formal comment period is formally closed, we understand DoL is still accepting comments. We wanted to submit the comments by email, but after 5 phone calls to various offices in the Office of Regulations and Interpretations... well, we snail mailed it.

And that, my friends, is part of the problem.

Update on Monday, August 17, 2015 at 10:50AM by hb

WWB's comments posted on DoL's page here: http://www.dol.gov/ebsa/pdf/1210-AB32-2-02605.pdf

Lowering standards to accommodate broker practices?

The vested interest of the brokerage industry is to avoid real fiduciary standards. They can thereby retain the ability to harvest fees for overpriced, under performing product and sell those products to clients under the safe harbor of the "suitability" standard.

This is the same old story: industry participants collude with legislators to tilt the regulatory table for economic advantage.  We've seen this act before... remember the Savings & Loan Crisis? Fannie & Freddie & the Sub Prime mess? 

We don't know the folks at Fund Democracy, but we think they have it exactly right:

“Our concern has always been that if the SEC were to decide what the fiduciary duty is, it would lower the standard in order to accommodate broker business practices,” said Mercer Bullard, founder and chief executive officer of Fund Democracy LLC, an advocacy group based in Oxford, Mississippi.

source: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aDRJvkh6IQGk