September 10, 2008
I have been working in the Financial Services industry since 2001. I have had the opportunity to work with a few different Broker/Dealer firms. With my clients I mainly use managed accounts utilizing mutual funds and ETF's. Occasionally I also use non traded REITS among other tools. In some cases I have also found value in some indexed annuities to fill my clients needs. If the indexed annuity became a security it might help me by reducing my competition b/c fewer people would have the option to use the product with their clients due to licensing requirements. In my years as an advisor and CFP I have found that almost everyone has the client's best interest at heart and for the most part are honest. However I also know that in every group there are some that create a bad name for the whole. I suppose I have seen more abuse by registered reps churning and placing clients savings in unsuitable risky positions in an effort to accomplish their goal of AUM.
In my opinion FINRA will not help our clients any better than my State Insurance Dept does. The only differences we will see is the B/D's will take a piece of the little guy's pie as they do with all currently registered securities and the benefits of the indexed annuities that are now available will be watered down.
As with any FINRA regulation the amount of paperwork required to conduct simple transactions will also grow costing the little guy more time and money. The product will become more difficult for the client to understand with FINRA's involvement. All this new government intervention is supposedly being done to protect the client. It's a classic big government line that is always used to take away freedom from the free market. Money that would go to the producer who does the heavy lifting will now be taken out of the little guy's pocket and given to the new and more powerful FINRA and their B/D's.
It is obvious to everyone involved that the SEC is bowing to the now more powerful FINRA in the name of protecting the client from the ever guilty before proven innocent advisor.
FINRA's involvement will not help the client any more than they help the client from abusive variable annuity or mutual fund sales. This is a classic case of a government entity being lobbied and hurting the constituents they are claiming to protect.
I would agree that the insurance industry should require a different license for insurance only agents to receive the necessary training to be able to give their clients proper advice. But more government involvement by the SEC and FINRA getting their hands in the pocket of the little guy is not a solution in any way. FINRA's involvement will only hurt the client and the advisor.
Please SEC stay out of the market as much as possible and let the existing government agencies improve their protection of the client. Keep FINRA away from the advisor's pocket.