July 30, 2010
I am a Registered Representative. I have worked for large firms and am now an 'independent'. I have been dismayed by the number of disparaging remarks on a number of RIA firm's websites, disparaging my profession, comparing me to a car salesman, and disparaging FINRA, etc. The keywords with these RIA firms is 'fiduciary', like that is a divine blessing bestowed upon these people. They only work in a client's interest of course. Today on the radio I heard more mantras-'we do not sell anything' 'we have no sales charges'...ad nauseam....
I am not a Series 65 but know of RR's that work with major firms and are extremely reputable and work within the parameters of suitability in an ethical way.
If the fiduciary standard would affect all RRs, I think it would eliminate the freedom to sell securities for the rest of us. We are all too different. Securities in general are meant to be sold, and any effort to negate the RRs ability to exercise his or her's Series 7 would be in my opinion actionable. Suitability can always be fine tuned, but because so many of us are in the industry, there has to be a realistic approach. I hear much whining that RRs put clients in terrible mutual funds and instead should have put clients in Index Funds. If everyone was put in an index fund, this would distort the markets. Yet the fiduciary argument favors the latter approach, in general.
Also. I have never understood why it was allowed for the do it yourself discount brokers to exist. I know of an individual that may be acting as a investment broker for relatives, without a license, via one of these companies. Why there was a carve out for these individuals does not make sense.
I have to have a license to fly my airplane, and find it hard to believe we as a country allow unlicensed individuals to clutter the market place. You cannot fly my airplane without a license because you do not know how to fly. Many of these clients trade numerous times a day, and almost always lose money. I witness this often with a specific friend. Yet we allow individuals to do this without any instruction or licensing.
Concerning standards, FINRA is a strict regulator, and the restrictions are great on us the RRs 'selling' securities is incompatible with the fiduciary standard, in general I guarantee you every RIA rushes to their calculators every time a prospective client walks in the door, of course after the speech about 'its all about you, we are on the same side of the table, etc. ' and the Series 65 folks do this too I would appreciate a directive to all RIA firms to cease disparaging remarks against those of us and FINRA, on the 'non' fiduciary side of the house.
We cannot regulate human nature, but we can improve the suitability definition to effect a workable solution.
Stephen R Smith
Registered Representative
Aberdeen, NC