Gentlemen and ladies: I suspect that at least some of you have been a bit confused by what you've been hearing from us, either through our grass roots visits to your offices, or from the occasional lobbyists we send in your direction. I can see the source of your confusion. From the outside, it must look strange that the profession was in favor of a fiduciary standard, but when it came time to come to the table and compromise between different interpretations of the word “fiduciary,” we backed off and wanted no part of the discussion.
We talk about protecting consumers, but you have to assume we have some underlying agenda behind that, because every industry hides its agenda behind a smokescreen of benefiting the public. That fact that our hidden agenda is hard to find must make you uncomfortable-and you probably welcome the candor of our lobbying opponents, who at least wink when they talk about how the public desperately needs access to sales reps who refuse to put the public's interests ahead of their own.
We have, with what I am sure must seem to be uncomfortable sincerity, tended to demonize the brokerage industry, where from your viewpoint, they are simply one side of a discussion and we are another. You ask us for campaign contributions, and we give you righteous arguments about having “truth” and “consumer protection” on our side, as if those qualities (which you probably doubt actually exist in the real world) will help you get you elected in the next cycle.
I'm here to help you see the forest for all the trees that we've been meticulously putting in front of you these many years. Because there really is an underlying logic to everything we're doing. We have a goal, which I hope you'll see is actually worthwhile to you, to society, and to your constituents.
You see, fiduciary is not our goal. Our goal is to create a profession. By “profession,” I mean, specifically, a cohort of service people who are qualified by education and training to give financial and investment advice to the general public, and help them navigate the complex financial markets so they can achieve their financial goals. There are many other things this new profession will do (and is doing) for the public, but the gist of it is that all of them designed to help people live better, more prosperous, more effective, more enjoyable lives. Our best model is the doctor, who has a variety of tools and educational training which make it possible for him or her to promote health and wellness in the community, one individual at a time. Our professional goal is to foster and promote financial health and wellness in a nation that has far too much poverty, where far too many people live lives of quiet desperation. One person at a time.
If you understand this, then a lot of other things will be more understandable. Why are we unwilling to negotiate the finer details of the fiduciary standard? Because we believe that the current standards support the financial health and wellness of the community-including your constituents-and we believe that any negotiation will undermine our professional standards.
Why do we demonize the brokerage firms? Because we know that their real agenda in all these lobbying skirmishes is to weaken or extinguish this emerging profession whose idealism threatens their predatory business model, just as a doctor's impartial judgment about medication limits a drug company's profits.
Over the years, we've tried to create distinctions between people who work for and on behalf of the public, and sales professionals who work for and on behalf of the wirehouses and brokerage firms. We asked the SEC to enforce the Investment Advisers Act of 1940 and require brokerage firms (which prominently market their investment advice services on TV and in print) to register as RIAs. The brokerage firms managed to nix that effort, and now the term “investment adviser” means nothing to the public.
Some years back, professionals voluntarily gave up commission revenues, and the conflicts of interest that they created in a professional relationship, and use the term “fee-only” as a bright line distinction between sales reps and professionals. The brokerage industry introduced the term “fee-based,” which re-confused the public, and continued to embrace compensation “on the grid,” and the conflicts inherent in them.
We thought the “fiduciary” concept would be a bright-line distinction, and were willing to accept the legal standards (and potential liability) that has accrued over centuries of common law decisions. Now the brokerage industry is about to emasculate the concept so brokers can tell consumers that they, too, are “fiduciaries” in a watered-down sense of the word. Once again, they plan to masquerade as professionals and confuse the public.
I don't think we're asking for a lot from you. We're asking for permission to make a very clear distinction between us and them. They can continue doing what they do, and we'll take our chances that when people realize that they have a choice (to use their term) between a well-trained professional who wants to benefit their lives, and an individual with six weeks of sales training and a quota to make, they'll choose the professional every time.
Our lobbying goal, ultimately, is to make that choice as clear as possible, and we seem to be frustrated at every turn. Maybe it's because we haven't been telling you exactly what our agenda is, so everybody can cut to the chase and decide whether the brokerage industry will be allowed to strangle this professional baby in the crib. In the past, professionals have managed to win this battle, and the world is a better place.
We wouldn't think of allowing drug company salespeople to pose as doctors, because the medical profession brings great value to the world, and the conflicts would undermine that value. Our hope is that all of you in your various leadership positions will afford our emerging profession a similar chance to benefit the people of this country, no matter what you ultimately decide to do to the fiduciary standard.