August 23, 2010
The suitability standard governing broker-dealers and registered representatives is a robust and heavily enforced standard. It is the broker dealer's enforcement of the regulations that makes the broker dealer system work for the investors. My firm requires a minimum of 2 compliance audits per year.
The standard governing Investment Advisors is less regulated. Based on my personal experience, many Invesment Advisors were prviously FINRA (NASD back then) registered representatives, but gave up their registration to be free of the red tape of broker dealer enforced compliance regulation.
Many of the ponzi schemes that effected investors were run by those regulated as investment advisors.
I believe that the current Broker Dealer system of enforcing rules and regulations best serves the investing public, and should be used as the model for all advisors (Brokers or Invesment Advisors) that deal with the public.