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Category: Bob Veres’ Blog

The SEC’s Own Compliance Culture

I’m beginning to think the term ‘compliance’ ought to be repurposed.  To simply ‘comply’ with legal and regulatory guidelines is not exactly a lofty standard, yet that’s the term that broker-dealers and wirehouse firms have adopted, and it seems to be the term preferred by the our regulatory friends over at the SEC.  Maybe you see something different, but from where I sit, there is no actual encouragement from federal regulators to go beyond (somewhat grudging) compliance and embrace higher standards. Like fiduciary, for example.  Recently, we heard compelling evidence that the SEC wants to downplay the fiduciary concept among…

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Yet Another Modest Proposal 

You may have read about a recent ruling by a Superior Court judge in Georgia who discovered what I think we all knew: that FINRA runs its arbitration system like a kangaroo court, putting its thumb firmly on the side of the scales of justice that benefit its member brokerage firms.  I think it’s long past time for the financial planning community—and anybody who cares about protecting consumers—to call for an end to the arbitration agreements that the brokerage firms routinely had to their clients.  I could be talked into letting them require arbitration agreements, but only if the forum…

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A Hierarchy of Conflicts

I was talking with Knut Rostad, founder of the Institute for the Fiduciary Standard, about his recent conversations with people at the SEC.  He is cautiously optimistic that the “new SEC” is, for pretty much the first time in his career, open to hearing about how a fiduciary standard for all advice givers would be a significant step forward in consumer protection.  But he is also getting feedback that nobody at the top wants to alienate the staff—and the SEC staffers have mostly been hired by SEC leaders—going back 20+ years—who have been far more sympathetic to protecting wirehouse profit…

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Member Benefits

As I was writing the lead article for this issue of Inside Information, I came back to a question that I’ve been pondering ever since I worked at the International Association for Financial Planning back in the 1980s: what is the purpose of a professional association?  The easy answer is: to serve the members—and I would argue that some associations, including, for a couple of decades, the Financial Planning Association, have gotten that backwards, and somehow assume that their own health and viability is of key importance to the profession.  I remember, from personal experience, when the IAFP made that…

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Fiduciary Advocate

By now, I’m sure most of you are familiar with the Committee for the Fiduciary Standard—but if not, well, it’s a group of prominent advisors who advocate that anybody who holds out as a financial planner or advisor be held to a strict fiduciary standard.  I participate in their discussions, though I’m not formally a member. Every year, the Committee selects a worthy candidate to be given its “Fiduciary of the Year” award.  Past winners include Ron Rhoades, David Tittsworth, Skip Schweiss, Phyllis Borzi, Harold Evensky, Barbara Roper and, in 2016, the entire U.S. Department of Labor.  For the past…

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How the SEC Has Strayed From Its Mission

In case you missed it, the XY Planning Network—Michael Kitces and Alan Moore—have filed two petitions with the SEC, and they’re far more ambitious in what they’re asking for than anything I’ve seen from our trade or professional organizations.  In fact, they make the case that the SEC has totally perverted its consumer protection mission, which is clearly spelled out in the law, for at least the past 20 years.  If the petitions get traction, it could bring about huge shifts in the regulatory playing field for fiduciary advisors and Wall Street—and benefit financial consumers perhaps most of all. One…

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New Voice at the SEC

You may have missed it, but Barbara Roper, who was the financial services face of the Consumer Federation of America—a tireless advocate for a fiduciary standard and consumer protection generally—has a new role to play.  She is now working at the SEC, as senior advisor to SEC chair Gary Gensler. Roper’s best work at the CFA came when she would call out the hypocrisy of the brokerage firms, who would advertise that they worked diligently for the best interests of their customers, and then lobby vigorously against having to be held to anything like that standard by the regulators.  When…

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The Misreading of ESG

I’ve been reviewing a lot more articles about the SRI and ESG investment movements lately than I ever did before, and I think that’s a sign that more people are interested in owning shares of companies that are behaving responsibly—however one might define that.  I’m not surprised; the very first time I was exposed to the concept, I viewed the filters as a logical part of the equity research process.  They were a way to identify what many of us believe are harmful aspects of our currently barely-regulated capitalist system.  But often the articles I’m reviewing are telling us about…

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Cultural Fit?

I have to confess that I’m worried.  I started worrying the minute I heard that the Schwab organization was acquiring TD Ameritrade, not on the consumer side (two entities that basically encourage people to trade themselves into bankruptcy, but not nearly as bad as newer entities like Robinhood).  My worries are on the custody side, where thousands of advisors are being swept into a culture they probably know little about.  I worry that Schwab’s internal culture is not completely compatible with the idealistic mindset of the planning profession—which is why we have never invited Schwab Advisor Services to exhibit at our…

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