March 27, 2013
I have attended various marketing events where financial advisors attempt to attract retail investors. I have experienced that a good percent of the audience has a lack of knowledge regarding the investing process and their investments. I agree that anyone who provides investment advice for some form of compensation should comply with a Code of Ethics and Standard of Care. Unfortunately, securities are not the only products that are being sold. Insurance policies are also included as an investment vehicle.
Now my concern is how will the Code and Standards be enforced. I believe that this would require documentation which could take a significant amount of time for the regulators to evaluate. We could require the firms to self police their actions and provide an anual summary to show that they are in compliance. However, I think we need to have investors take on more ownership of their money and get the proper education so that they know what to ask for, where to go for questions and potentially have the investor fill out a standard evaluation. The investors have to be accountable here as well, it is after all, their money.
I am concerned that over regulation here will cost us and may not be very effective. Keep the process simple and transparent.