Whose Interests Should Come First?

[kenarobs]

RE: Whose Interests Should Come First? (Veres, Aug 3, 2011)

When clients and prospects ask me what I do, I tell them I deliver the financial planning process. Perhaps I sound a bit like an evangelist or medium. But I really believe that participation in the process itself is about 80% of the value people get from working with me over the long run. My main job is to get who my client is, then discipline myself to deliver the financial planning process to them so that they can look, see, feel, learn, grow, decide, and then act with conviction into and through their decisions.

For me, then, the efforts of the profession on behalf of "consumers" (clients and potential clients: in other words, nearly everybody) are well aligned with those of the profession (financial planning, of which a component is investment planning and management) insofar as we endeavor to influence regulators, legislators, other professionals, and consumers to embrace and promote the financial planning process as the best shot most people have at steering the material component of their lives toward satisfaction, fulfillment, and success.

Commitment to a fiduciary role is an element of doing the job. We financial planners should lobby for it being part of what separates the sheep from the goats, for what that's worth. When I try explaining fiduciary to clients and prospects, most of what I get is "Uh-huh fiduciary blahblah. Can I count on you?"

Fiduciary is only an element. Folks paid for transactions and vending proprietaries in a self-serving manner ought not to distract us too far. I remember (incompletely) hearing one of the founders (Blankenship? Baldwin? I don't recall, sadly) saying to a group of financial planners that the real competition is not the brokers or the insurance salespersons, but the malls.

Bob, thanks once again for encouraging us to swivel our heads further in looking for the main purpose to our lobbying. Maybe a full 180.

[Bradly T.]

Nice post ken - I fully support your belief in what really drives value to clients ("80%")....planning!! And while I also enjoy the thought provocation Bob supplies us regularly, I must take some exception to his premise and conclusion. First, he is as culpable as the Noncoalition for ending the competitive "advantage" of fiduciary RIAs over BD reps....by his endless criticism of commissions and attempt to destroy an entire business model; this has a loooonnnng history of rhetorical "journalism". So I object to his posture of surprise and innocense due only to the unintended consequences of HIS rhetoric over the years. Second, the article topic seems to be what to do with the barn door....now that the horse has clearly left the building. The genie is out of this bottle....thank you Bob V. and the Noncoalition. Third is the false presumption that those who are comped by commission ARE inferior in both ethics and expertise which is patently untrue.....very faulty logic with zero facts to support it. I believe the difference in expertise and ethics lies clearly along the fault line of who does true planning and who does not and worse, who says they do but don't.


The fact is that endless fees are not only NOT in the best interest (always anyway) of millionaires but that model is not even available to the vast majority of households at all....even if it WERE in their best interest. This elitist position of Bob's is very disappointing and his false premise which led him to bluster his rhetoric toward the current homogenization he now regrets does not endear him with his audience. As a dualie indie, I for one embrace the uniform standard to come and believe different hats at different times is silly and hypocritical. The most stringent standard in-force with every relationship should prevail throughout. Now it is true that this harmonization standard will both gut the prior standard and eliminate the prior differentiation, one must be careful what one asks for.



My final criticism for Bob is his total focus on investment advisors. He's not even asking about what's best for planners despite the name of his magazine. Bob is a champion of them....not us....clearly. And yes, as a planner, it would be nice if SOMEONE, ANYONE were representing OUR interests as no one is, especially NOT the Noncoalition who have jumped into the same bed as Bob.....the wrong bed full of very strange bedfellows. Who all deserve each other. Talk about self serving interests to the great loss of both consumers AND advisors. Good job folks!!

[Stephen Winks]

Bob,

The industry's lais-sez-faire attitude toward professional standing makes fiduciary standing all the more distinctive for those that actually provide fiduciary counsel. It is easy to establish who is acting in the client's best interest which is the best marketing tool advisers have. Just ask 8 or 10 questions that brokers and even some planners can not answer affirmatively. Thus, acting on behalf of the client in the client's best interest is the acid test that pretenders can not fake.

A case in point is the vacuous push back the brokerage industry gave the DOL's Phillis Borzi when she testified that IRA accounts should obviously be held to the fidiciary standard, as has been the case from the very start. It is clear the brokerage industry has no idea, as professional managers, how to make the obvious move from packaged products to packaged advisory services which by structure would include IRA advice. Essentially the brokerage industry is surprised that it has to do anything differently in order to comply with fiduciary standing in the best interest of the consumer.

Thus, I not only believe the consumer's best interest should and will come first but believe the brokerage industry will be so reticent to act in the consumer's best interest even when required to do so, that it will be self defeating with a more expensive and far inferior approach to advisory services. The industry's top brokers will not stand for this, nor should they stand for their firm's total disregard for fiduciary duty as evidenced by the industry's embarassing testimony around the IRA issue. Either the brokerage industry is going to provide world class support for fiduciary duty or brokers are left no choice but to seek first rate advisory services support elsewhere. Therefore, don't be too worried about advisers loosing their edge relative to brokers. We should feel sorry for brokers captured in broker/dealers who have been crippled by their firm's inability to support the best interest of the consumer. This is a leadership problem, with leadership focusing on its best interest and not that of the consumer.

SCW

[Bradly T.]

Any system or model which excludes over 2/3 of households and current account balances IS NOT, CANNOT, AND NEVER WILL BE "in the clients' best interest". You cannot exclude the majority in favor of the minority while claiming to be concerned with consumers. And another bald face lie by you Mr. Winks is that IRAs "should be held to the fiduciary standard, as has been the case from the very start". How can one state something so illogical first and false second!!?? If IRAs are and have been under the standard, then why "should" they be; there would be no change under consideration. They obviously have NOT been or the DOL would feel no need to make them so. The majority of IRAs, by number, will have no custodians available and no access to global markets for the creation of wealth, the distribution of wealth, or it's transfer if the DOL takes them over (no investor has had a worse outcome the past 20 years than the ERISA, 401k participant thanks totally to the DOL - and you want THEM in charge of IRAs? Of course you do).


You guys want to kill all the horses before the car is invented (or at least prior to the democratized Model T) simply due to some twisted idealism, much like Marx and Tolstoy's desire to kill capitalism and uplift the masses (while they lived with a big silver spoon hanging out of their mouths - only their solution could have been worse than the plight of those they wanted to "save"). Deliver the system that allows managed accounts for the $5,000 IRA with $200/mo. being added or the $1,000 529 account, or the $250,000 account distributing 4% income increasing every year. Deliver the system that includes REITs, Reg Ds, income and deferred annuities with true risk transfer and one that holds individualistic cash reserve positions without excluding 90% of professionals and 90% of financial products in the spectrum available today to the masses.



Bob's article misses the point completely. He has NOT been championing what's in the best interests of clients and he is NOT championing what's in the best interests of the industry - BOTH are total falsehoods. He is schilling for a competitive and personally preferred business model (by constantly attacking the others) and his schilling has cost advisors their distinctive service model, their relative independence, and raised their costs significantly; the result of which is even higher minimums and charges to those clients who can qualify for their "service" - you know, the one which puts the most money in the pocket of advisors and firms and takes the most money out of the pockets of clients (but in their "best interest" of course). His latest premise is to give up on client's interests and focus on advisor's interest. HAHA!!!! I hope he's never focused on my best interest.....given his Cheneyesque aim and foresight. Lord help us from him....and you.

[Bradly T.]

Please excuse my grammatical dyslexia Winks....I understand now you were saying IRAs always should have been under the DOL ERISA controls. A statement I certainly disagree with but not illogical as I claimed. The illogic lies in the results of the DOL's plan participants and hoping for the same platform and results for IRA owners. Good Grief!! There must surely be a way to perform in a client's best interest that does not require huge balances or preclude accumulation and distribution priorities and makes small account and household balances attractive, or at least profitable for practitioners. That is the SEC's mandate under DF....we shall see. But the DOL?? No way.

[Stephen Winks]

Bradley T,

I am not familiar with any suggestion or proposal that two thirds of consumers not be served.

You might want to elaborate. Your post makes absolutely no sense.

SCW

[Bradly T.]

Let's begin with national stats - average 401k balance for 55+ is under 75K. I'll bet IRAs are even smaller. This "average" balance is skewed by those over $500k dramatically upward. Anecdotally, my average household balance is $250K with an average of 4 registrations - Jtwros, Roth, IRA, trust, individual, etc. Where's Tad B. when you need him? He has more facts than Carter's got little pills.


THIS would make a GREAT journalistic investigation.....just exactly how many brokerage, annuity, and directly held funds accounts, by registration, are there under $100k? $50k? $10k? Where would these accounts reside if not for regreps? They sure wouldn't be in any wirehouse or RIA. And the DIY brokers will also stop custodial services if DOL has their way.



You and Veres champion services for the ultra wealthy - top 10% of networth (called HNW by all the millionaire chasing articles in the rags). Your mutual concern for this class of investors is misplaced and not endearing. And even if you can democratize mngd money to smaller accounts....and remember, the journalists tell us to dump the low net worth households to maximize profit and increase efficiencies, how do we place the available spectrum of product into a rigid allocation contract? Face it, elitism is rampid in this industry with a "let them eat cake" message everywhere.



Veres self interest is evident....get published and read (not client or advisor best interests). And you're a salesman, selling a solution for all, once we all must be and do the same thing. Neither of you are in practice or have clients to serve at all. Your self interest is all too clear....and so is Bob's. Access, choice, competition; anything less is undesireable and in no one's best interest except those gatekeepers and monopolies who can profit thereby.

[Stephen Winks]

Bradley T,

If you had your way, we would wait for the country to be bankrupt and completely out of cash and credit before you would take action. It is obvious that the brokerage industry must approach IRAs differently. You approach would be to completely rewrite ERISA and our eight centuries of understanding of fiduciary duty to avoid the industry effectively managing its fiduciary duty.

Whether you like it or not, brokers have a fiduciary duty in advising RIA accounts. The solution is to move from the sale of packaged products to packaged advisory services to include IRA advisory which disconnects commissions from the equation. It is not a question of product sales, or investment minimums, it is a question of advisory services without regard to investment minimums because it is a fiduciary duty to act in the consumer's best interest. Under your scenario, if the commission is not big enough you will not serve the client. Under my scenario you serve the client as your professional and fiduciary duty.

Those of us in the advisory services business would like nothing better than for you to continue to sell expensive commission products which are inconsistent with fiduciary duty. If you wish to be a high cost low value added product vender when the entire industry is moving to advisory services and fiduciary standing, it is certainly your perogrative, but the vast majority of advisers prefer to act in the consumers best interest in a fiduciary capacity and to do so at far less cost than a commission sale particularly relative to IRA counsel.

If you can't figure it out, you competitors are sure to.

SCW

[Bradly T.]

So I didn't misunderstand then....you think IRAs are subject to ERISA. Another falsehood. IRAs have always been subject only to the IRC...not even suitability, let alone fiduciary, as banks and insurance companies act as custodians without any DOL or SEC or FINRA oversight. IRAs have always only been subject to custodian rules and reporting with little restriction on asset class or distribution network or other federal/state oversight. This attempted hijacking by the DOL will fail, by policy, by politics, or by the courts...they cannot take over what has never been theirs legitimately.


Out of cash and credit? What the hell are you ranting about? What does the industry have to do with that? The retail distribution industry I mean. We've had no influence whatsoever on the past calamity or the next. And you continue to ignore the elitist and exclusionary position you and Mr. Veres share. What of all the accounts and households below minimums.....the vast majority in both cases? ERISA has no eight centuries of history sir....there are multiple fiduciary definitions and obligations (at least 8-10) with ERISA being by far the least effective and most horrible in it's result. Indeed, under ERISA no institution has ANY obligation to ANY participant except to not give advice without 404c liability so, therefor, no one gets advice or much if any education....they get a preselected menu of limited funds. At least RIAs actually manage allocation....but ERISA plans do not.....it's every ignorant soul for themselves....it is downright shameful.



And it is well established that the managed account model is BY FAR the most expensive of all compensation models and the one which makes the most money for advisors and firms....hardly in the clients' best interest by any definition.

[Stephen Winks]

Bradley T,

It is all about doing the right thing for retirement assets.

You may certainly do what you wish, but if you want to act in the best interest of your clients and fulfill your fiduciary duty, you will follow the ERISA model. If you do not want to act in your client's best interest you will not.

We all know what the client prefers. That is why you are on the loosing end of this arguement.

If you have to be prompted on what the right thing to do is in your client's best interest, then you remove any previous doubt concerning whether you are acting in a fiduciary capacity.

None of this should be required behavior, it should be expected by the consumer. Yet, you are the perfect case why consumers can not take a broker's word for it that the broker is acting in the consumer's best interest.

SCW

[Lucullus]

Bradley,

You keep trying to hold a serious debate with a fanatical ideolog who, even if he were intellectually and ethically capable of understanding the merit of your arguments, would not do so.

Would you try to argue with someone who believes the Holocaust never happened or that the earth is flat?

[Bradly T.]

John - Lately, my "dialogue" with the demagogue always begins with my comment on or criticism of Mr. Veres' repeated insanities within his non-conVEREsations. I certainly agree that Winks is at best a tackle dummey for noncompetitive exercise and style development - hardly live fire material. But he does provide multiple, if not endless, triangulation to Veres' and the noncoalition's threats to reason and the results of their nefarious posturing. Like this article pretends that Veres has ANY interest in what's best for consumers OR practitioners and tries to hide his total lack of regard for the profession for which his magazine is named....financial planners. Like the noncoalition, Veres endlessly pretends that investment advisors and financial planners are the same animal or species. And he contends that commissions are somehow unethical and those who "act in clients' best interest" by charging them more than commissions pay and earning more money than any other model is somehow acting in anyone's best interest other than their own. This preposterous hypocracy and self serving message is resonating for some reason in the halls of Congress and the media at a very critical time and must not go unchallenged. Winks is but a foil for the sabre point of reason, logic, and truth. Stephen's sniping and character assasination and false accusations are apparent to all and a small price to pay to keep the story going. I certainly have no interest in him or his opinions.....after all, he, like Bob V., is not even in practice and has no clients who pay him anything for any reason, especially not their wealth management or financial planning needs....so, really who here could or would care what he thinks??!! Veres is the dangerous one....a wiley wordsmith who dimminishes our industry and doesn't even seem to know the role of financial planning......the champion of the highest paid advisors acting "on behalf" of the higest paid Americans and damn the other 85% of us and them. A real viper slithering through the grass of journalism.....but the aim of Dick Cheney, fortunately. Those he champions SHOULD be demanding his silence considering the results he and the noncoalition have brought down on their heads. Like I said, may he never be interested in representing MY best interests.

[Stephen Winks]

Lucullus (aka John Olsen) and Bradley T,

The discussion is focusing on advisers, neither of you purport as being.

If you were, we would have no disagreements.

You just haven't reconciled insurance sales with fiduciary duty, yet in the comming weeks and months it will become painfully clear that it is in your enlightened best interest to align with the best interest of the consumer. If not, your local competitors whom you have so eager to disparaged as documented here--will have the satisfaction of returning the favor by pointing out your neither being accountable for nor assuming any ongoing responsibility for your recommendations required for fiduciary standing to include managing cost on behalf of the consumer and being transparent in cost and ongoing services provided.

You certainly have been good insurance industry advocates counter to the best interest of the consumer. The consumer just has not been aware of your hostility toward acting in their best interest.

I hope you might have a death bed conversion, otherwise there is no way for you to win your arguement that requires the consumer to insist that their adviser NOT act in the consumer's best interest. There has never been one incident in the history of man where the best interest of the consumer has not prevailed in a free market.

SCW

[Bradly T.]

I've tried.....but I cannot think of a single example where capitalism, even within a free market, has EVER been concerned or directed by ANY consumer's best interest. It's all about profit by marketing with supply and demand competition. Take Apple's planned obselesence, or MicroSoft's tyranical monopolies, or fast food's poisening of America, or Google's super-spy digital tracking and marketeering with those results, or the auto maker's appeal to vanity and speed over mileage and safety, or maybe you mean China's poisen wallboard, petfood, and toys. The consumer's best interest is never a consideration of any free markets....only their business and how to get it are. It's a ruthless and cutthroat business Winks, uncaring and unforgiving and relentless in pursuit of profit....not evil but certainly not benign or caring.


In this discussion, the issue really is what IS in the client's interests? It certainly is not the model which excludes the many in favor of the few and costs consumers the most and makes the most for the practitioner. The more logical conclusion would be that SINCE it is in every practitioner's own self interest to act in their client's interest, most of us do and will continue to, DUE to that self interest. Anyone with a brain must also conclude, based on exhaustive evidence, that apparantly, regulations have NEVER actually delivered their mandate.....ala Madoff, Starr, and hundreds of other examples recently. This one won't either.

[Lucullus]

Bradley,

How does one argue with someone to whom the truth means NOTHING? Clueless writes -

"Lucullus (aka John Olsen) and Bradley T,

The discussion is focusing on advisers, neither of you purport as being."

Both us are are investment advisors, registered as such, regulated as such. Both of us have stated as much many times in these forums. Clueless knows that. But it suits his purposes to declare as truth that which he knows to be untrue. This is just one more example of the cynical and willful mendacity of Mr. Winks. He declares outright (when he can manage to construct a sentence in comprehensible English [see above quote]) whatever he wishes others to believe is true, perhaps in the belief that if he says it often enough, people will believe it. Joseph Goebbels believed in that strategy. So did Senator Joe McCarthy.

That Mr. Winks announces that the focus of this dicussion is advisors and chides us for not being advisors (which he knows to be a lie) is contemptible; that he presumes to do so when everyone here knows that Stephen Winks is not an advisor is merely ridiculous.

- Lucius Licinius

[Bradly T.]

Stating lies as fact, endlessly, should result in a total loss of credibility to be sure. I just love this one too much to ignore it. Perhaps he means the medical industry? Pharma? Energy? Home construction? Self destructing clothing? Fashion? Agriculture? I know!! Banking and credit!!! No, that can't be it. Snake oil? Hair restorer? Tanning? No....can't think of a single industry where the consumer is considered EXCEPT as a source of consumption and revenue. Capital (wealth at work) is amoral....period. The capitalist behavior to increase capital (or return on capital more specifically) is sometimes guided by what the consumer believes to be self interest, but only to the degree that such concern/deception is PROFITABLE to the capital. This lie is really too much.

[Bradly T.]

OK Winks - you made the declarative so pony up soldier!! Give 3 examples from any industry at any point in time where consumer interests drove the capitalists behavior. The best example I can come up with IS the Model T, Henry's stroke of genius. But that old capitalist was actually a shrewd marketeer as well and NOT truly concerned with the upliftment or outcomes of the consumer. By tripling wages on his new assembly line (which allowed him to cut the cost of a car by 2/3 on the competition), Henry was creating a whole new class of consumers - America's labor force, and killed the competition in one fell swoop!! Genius to be sure - consumer driven? Not so much. PROFIT DRIVEN.....as always.


Otherwise, I'm blank here. As consumers, we all better hope someone gives a hang about our "outcomes" and "interests" but it ain't regulators or capitalists!!!! For sure. Choice, access, and competition are the only regulators with any positive effect on consumer interests (not an absolute one to be sure). If one were truly concerned with clients and consumers (and you're obviously even less concerned than Veres with anyone's interests but your own), they would not promote an agenda AGAINST the interest of the majority in favor of the tiny minority. Your elitism could not be more apparent, neither could Bob V's.



But, he does raise an interesting question.....why should our industry be the first in history to reduce competition and choice on behalf of consumers in the name of their protection? How can it even be done? Less is not more. Even the previously revered occupation of physician is so far down the road of self-interest and self-dealing, it is a total self protection and me-first occupation today. And yet, most practitioners care deeply about patients and expertise still. So when profit is illegal, come back and try again. Of course, when profit is illegal, so will the most expensive model which makes the most profit....the AUM model my friend, the AUM model. You better hope Congress doesn't catch wind of THAT fact and reality while suffering anti-profit dementia. Your position is so un-American, it's downright commie.



Logic would suggest.....Winks is against profit and choice and capitalistic forces, therefor he's a communist....socialist at best. Winks believes government can efficiently and effectively regulate and deliver consumers' best interests, therefor he's a communist, socialist at best. Now there's a structure of reason with a logical conclusion to chew on.

[Stephen Winks]

Bradley T and John Olsen,

I do not respond to your every post as a matter of time, and I am not going to try to coach you on common sense, basic economics, the elasticity of demand, much less cojoint reasoning and utility theory.

I am sure you fellows are fine insurance agents, please don't assume that that extrapolates into your being expert advisors acting on behalf of your client's in your client's best interests . You clearily and consistently prove you are not acting in a fiduciary capacity in your client's best interest in your every post. Despite your protestations otherwise, you have stated yourself you simply do not do the work that would that would constitute fiduciary standing. You are not accountable for your recommendations, you do not fulfill your ongoing fiduciay duties and do not provide transparency in cost and compensation--all of which is required for fiduciary standing.

In order for you to prevail in this discussion you and your trade association (the National Association of Insurance and Financial Advisers which is opposed to advisers being held to fiduciary standing in the best interest of the consumer) would have to defend the rewriting of 800 years of law which establishes our understanding of fiduciary duty and the rewriting of ERISA simply because the insurance industry does not have the professional management skill to support insurance agents acting in the best interest of the consumer. Your opposition to acting in the best interest of the consumer and fulfilling your fiduciary duties is simply an insurance centric view of the world and is irrelevent to expert advisory services based on the traditional understanding of fiduciary duty.

This is embarassingly sad on many levels, the most important of which is your total disregard for the best interest of the consumer which all would agree is distroying the trust of the investing public. Who does the client believe? The pretender or the real thing. If you want to say you are a fiduciary acting in the consumer's best interest, then do the requisite work. If you don't want to do the work, then you can not say you are acting in the consumer's best interest. It is that simple and the trust of the investing public is preserved--the point of good public policy.

SCW

[Bradly T.]

To propose that one cannot act in a client's interest if one is not a fiduciary is false. To presume that a fiduciary obligation results in the client's interest is also false. To claim that one does not or cannot care about their client's interest without the fiduciary is also a falsehood. Your entire position and conclusion are based on falsehood - not fact. Your elitism and disconnect from reality is all too apparent.

[Stephen Winks]

Bradley T,

No elitism here, it is simply acting in the consumer's best interest which is good public policy based on 800 years of common law which tells us what that means. You just have difficulty acknowledging that you have not been acting in your clients best interest--which is what this fiduciary arguement is all about--your clients will wonder what you have been doing all these years.

The answer is the industry has reconciled its conflicts and there are now ways you can work with clients that we not available to you before. If you don't say it your competitors will. Bradley, all I have to do is pose a few questions you can not affirmatively answer and it is clear to everyone you are not acting in a fiduciary capacity.

Things change and the world moves on.

Don't get stuck in the past, move forward in a positive direction in ways you can demonstrate you are acting onbehalf of your clients in their best interests.

SCW

[Lucullus]

What is "embarrassingly sad" is the continuing insistence of Mr. Winks to demonstrate that he lacks either the intellect to distinguish truth from falsehood, logical from illogical, and fair from unfair or the willingness to do so.

Examples:

"You clearily and consistently prove you are not acting in a fiduciary capacity in your client's best interest in your every post. Despite your protestations otherwise, you have stated yourself you simply do not do the work that would that would constitute fiduciary standing. You are not accountable for your recommendations, you do not fulfill your ongoing fiduciay duties and do not provide transparency in cost and compensation--all of which is required for fiduciary standing."

Speaking for myself, I have stated, repeatedly, that I do, in fact, work as a fiduciary, and that I am regulated as such - when I work as an investment advisor. Mr. Winks' statement that I do not is a flat lie, and he knows it. The last statement quoted is ridiculous. How would he know whether I do or do not "provide transparency in cost and compensation", as he has never seen my work? Answer: He could not know. In fact, I must provide an ADV Parts 2A and 2B to my advisory clients, together with a financial planning agreement detailing what I promise to do, what the client promises, what will be charged, etc. If Mr. Winks actually worked in this field, he would know that, because those are requirements of ANY agreement between a registered advisor and his/her client. Indeed, I am quite certain that he does know that, that he knows that his statement is false, but simply doesn't care, because he doesn't give a rap about being truthful.

I AM accountable for my recommendations, both when I work as an investment advisor and when I work as an insurance agent. Mr. Winks cannot stand the fact that those different roles are subject to different standards of care. That's his problem. He cannot live with what is, so he claims that what is is what he wishes it to be. He conflates the roles of insurance agent and investment advisor and rolls the resulting fantasy into what he claims to be "the fiduciary standard", but which reflects only one kind of fiduciary standard - that applying to trustees, portfolio managers, etc. He continues to claim that "the" fiduciary duty - which he claims applies to all advisors - requires custody of assets, discretionary authority, and the duty of ongoing care.

His claim is false. It is absolutely NOT true that a registered investment advisor MUST have custody of assets OR discretionary authority. Anyone who knows ANYTHING about this business knows that. Anyone who has ever actually worked in it knows that. As to "ongoing duty of care", Sect. 989J of Dodd-Frank specifically states that nothing in that law shall require such a duty of ongoing care AS AN INDISPENSIBLE ELEMENT OF THE FIDUCIARY STANDARD IT CALLS FOR. Again, Mr. Winks knows that. But he claims the opposite.

Mr. Winks has consistently mischaracterized the positions of others, misstated existing law, attributed positions to others that they have never taken, invented ridiculous statements and positions of others in order to attack them ("straw man" argumentation), and engaged in behavior that would shame a Middle School debate student. His posturing as a professional, interested only in protecting consumers by demanding that advisors act with utmost good faith and tell the tuth, might have some sliver of credibility were he to demonstrate those same behaviors. As it is, his persistent mendacity has revealed both his mission and the missionary for what they are.

[Stephen Winks]

Lucullis aka John Olsen,

Suddenly you are suddenly sensitive to the very specific requirements necessary for fiduciary standing which you have questioned in the past as being a figment of my imagination. My characterization of your practice is solely based on your own representations. The more specific inquires get as to fiduciary duties/standing--the more you come around. The new ADV Form 2 does indeed require acknowledgement of fiduciary status and services provided/not provided as well as disclosure of cost and compensation, not previously required for public consumption. All of which you have opposed. I am delighted that you FINALLY acknowledge there actually are ongoing fiduciary duties, with the exception that you still maintain fiduciary duty does not apply to the use of insurance.

As for the mischaracterization of the law, you consistently misinterpret a section 989J of Dodd-Frank that specifically applies to, and is limited to brokers, affirming brokers are indeed not responsible for exercising an ongoing fiduciary duty of care for their clients. This view is confirmed by expert legal commentarys. It does not say that advisers are exempt from providing an ongoing fiduciary duty of care.

As for custody, I have never made a statement that advisors must have direct custody in order to fulfill their fiduciary duty. This must be another of your unique, one of a kind, insurance interpretations limited to your opinion.

Essentially, you insurance boys have not figured out how to reconcile your assertion that you are acting in a fiduciary capacity in your client's best interests when it comes to insurance sales.

I suspect it will soon be in your enlightened best interest to figure out how you will characterize your insurance sales work with your suddenly discovered ongoing fiduciary duties. If you were just an insurance salesman there would be no problem. But you say you are an adviser and characterize your services as such, which seems like a misrepresentation as well as a conflict to me when it comes to insurance sales. Unless you assume responsibility for providing ongoing fiduciary duties for your insurance clients you are a broker mischaracterizing yourself as an adviser.

You are trying to have it both ways, acting as a fiduciary when convenient for investments and establishing trust and not when it comes to heavy commission insurance products where there is no ongoing accountability for your recommendations.

SCW

[Lucullus]

Clueless has outdone himself.

I have said only what I have been saying all along. But as he is either intellectually or ethically incapable of recognizing anything that doesn't fit his preconceptions, he declares that I am "suddenly sensitive".

It's unbelievably simple for anyone with a functioning brain:

When you're registered as a financial advisor AND ACTING AS SUCH, you're subject to a fiduciary duty. Not one which demands custody or discretionary authority, of course. (That is another of Clueless' inventions).

When you're acting as an insurance agent, the standard of care is "suitability". I have repeatedly stated that I feel that this standard is not necessarily sufficient, especially in view of the substantial differences in State laws regarding suitability. I have repeatedly stated that I applaud the NAIC Suitability of Annuity Transactions Model Regulation of 2010 AND the application of same, under Sect. 989J of Dodd-Frank, to sales of ALL insurance products.

I do NOT believe that the fiduciary standard that now applies to investment advisors should be applied, without any modification, to insurance agents because investment advisors do not engage in the same activities as insurance agents; While I have no problem with "putting the client's interests first" (no insurance pro that I know does), the implications of such a misapplication are serious. Example: Would a fiduciary standard require an insurance agent to recommend "the best product"? If so, who would decide "best"? Premium is certainly not a metric for such use.

As to Clueless' frequent insistence that "the" fiduciary duty requires custody of assets, discretionary authority, and ongoing duty of care, it's his own invention. And it's ludicrous. As any PRACTICING advisor knows, a registered rep OR a registered investment advisor/advisory associate DOES NOT have to have custody of client asets, and many B/Ds strongly discourage same. Ditto, discretionary authority.

Some financial advisors are hired to do a specific job for the client (e.g.: a retirement income analysis) under an engagement where the client neither wishes nor will pay for "ongoing care". Clueless doesn't get this because he doesn't wish to. He sees all advisors as portfolio managers and wants to treat them as such EVEN WHEN THEY DON'T MANAGE PORTFOLIOS.

If he were willing - or capable - of debating what modifications in the standards of care MAKE SENSE, there would be some point to this. But he is not (probably on both counts). Instead, he persists in attributing to me and others positions we have not taken, totally misstating what existing laws and regulations say, and, in general, behaving like a fanatical buffoon.

Ignorance is curable, when the ignorant person is willing to correct the condition. When he's not, it's not. And persistent, willful mendacity is both incurable and contemptible.

[Stephen Winks]

John Olsen,

Thank you for your absurd mischaracterizations and continued baseless disparagement which is predictable and totally ineffectual.

There could no more absurdity than you stating you are an adviser who is held to the fiduciary standard EXCEPT for being accountable for your recommendations and having any ongoing fiduciary responsibilities for your insurance recommendations.

When you reconcile your conflicted view of the world, you then may have something cogent to say about fiduciary standing and the best interest of the consumer. Until then, regardless how intently you may insist, you are mischaracterizing your acting in a fiduciary capacity when it comes to selling insurance. This does not mean you can't act in a fiduciary capacity in selling insurance, it means you choose not to fulfill your ongoing fiduciary duties in insurance sales.

Further your advocacy of NAIFA's interest in repealing brokers from being held to the fiduciary standard of care against the best interest of the consumer, belies any noble intent you may purport to act in the consumer's best interest. There is a fundamental cultural difference between you and I. You have peviously expressed "whatever acting in in the client's best interest means." It means what it literally says based on 800 years of common law, statute, case law and regulatory opinion letters to which your were exempt, prior to Dodd-Frank. Under Dodd-Frank, brokers are held to the same fiduciary standard as advisers--you and your insurance colleagues donot like that because it is not in your best interest. The truth is, you could care less about the client's best interest--until it is in your best interest to do so. The more you push back on fiduciary responsibility in a public forum, the more it becomes in your best interest to support fiduciary standing--as you do not want anyone to know your contempt for the best interest of the consumer.

You will surely continue to mischaracterize and disparage me as you try to change the subject because it is not possible to be a fiduciary in insurance sales without fulfilling your ongoing fiduciary duties as the adviser you insist you are. It is one thing to be an insurance salesman, but if you are to be an adviser acting in a fiduciary capacity you must acknowledge fiduciary standing and duty.

SCW

[Lucullus]

Evidently, Clueless continues to believe that when he characterizes the statement of someone else to say something entirely different from - and often, totally opposite of - what that person actually said and then points out the errors in that "straw man", readers will believe that he has discredited the other person's statement. (Proof source: Read what I wrote in my previous posting; then read what Clueless claims I said).

There may, conceivably, be a reader of these forums that gullible, but I don't think so. The only thing that Clueless could possibly manage to discredit when he does that would be his own credibility. But as he has none, that's not an issue.

There is some amusement value to his efforts, of course. I've used his postings in discussions with students and they've often gotten laughs. But some of those folks believe I've invented Stephen Winks. But I don't have nearly that much imagination. That said, his inventions could have some educational value. A course in logical argumentation could use his postings, just as they appear here, as splendid examples of how logical argumentation DOESN'T work.

[Stephen Winks]

Lucullus aka John Olsen,

I am delighted to respond to your ridiculous arguements.

If you are teaching your insurance "students" to have the same distain you have for fiduciary standing, you are a dangerous man in institutionalizing the subversion of 800 years of common law that informs us on fiduciary duty. You are precisely why Dodd-Frank is required to restore the trust of the investing public. You say you are an adviser with several exceptions which by definition preclude you from being an adviser. You just do not want to get it, because it renders obsolete everything you are apparently teaching.

1. You state that advisers must have direct custody of their clients assets is somehow connected to the adviser's ongoing fiduciary duties which could not be further from the truth. Though you characterize me as being clueless, this clearily exhibits you have no understanding of how to facilitate or use large scale institutionalized support for fiduciary standing. I might add that Bradley T has the same misconception. If you don't know how this is done, I will be glad to inform you, your broker/dealer or custodian.

2. Your "out" for circumventing your fiduciary duties is to engage your services to evaluate insurance solutions and to report your findings. Technically, you are not selling anything. You are just charging a fee for service. If your client acts on your recommendation, you are just selling an insurance contract, book your insurance commission and have no ongoing accountability for how that recommendation affects the client on an ongoing basis. The incentive is for you to maximize commissions selling the highest cost alternatives, because there is no fiduciary responsibility to act on behalf of the client in the client's best interest. Managing cost on your client's behalf is not even a consideration under a suitability standard. Thus, you and insurance trade groups are opposed being held to the fiduciary standard because the transparency of cost and compensation is unwelcome.

I am very concerned that your "insurance students" would find humor at taking preverse advantage of misinforming the consumer on insurance applications without cost and compensation being a consideration. You are placing the best interest of the insurance agent ahead of the best interest of the consumer.

In case you wish to to use this narrative for instruction--principled advisers actually act in their clients best interest and are responsible for every recommendation they have ever made, this is continuous comprehensive counsel required for fiduciary standing which entails very specific ongoing fiduciary duties. All of this is required by statute, case law and regulatory opinion letters, is based on 800 years of common law and is universally opposed by insurance industry. You just do not want provide the acknowledgement of ongoing fiduciary duties required or the transparency in cost and compensation required for fiduciary standing.

The bifurcating a recommendation into research and taking action (the sale) based on the research, in order to circumvent accountability for the recommendation and avoid ongoing fiduciary responsibility is the deceitful abuse of the consumer. If you were truely interested in your client's best interest, wouldn't you choose to act in a fiduciary capacity for all your recommendations to include insurance sales. This arguement is irrefutable. Perhaps your "insurance students" would find this amusing as well.

3. The fact you would have difficulty in defining "best product" explains why you are opposed to fiduciary standing as it applies to insurancwe sales as you would have difficulty with statutory requirements for transpatrency in cost and compensation.

Try as you may to change the subject through disparagement and mis-characterization, you have still difficulty reconciling your insurance centric views when it comes to insurance sales as applied in a fiduciary construct.

Consumers should have confidence that their adviser is indeed an adviser and the adviser is in fact acting in the consumer's best interest. You can not factually provide those assurances when it comes to insurance--based on your own assertions.

Would you care to disagree, based on facts, not disparagement, not changing the topic?

SCW

[Lucullus]

Once again, Mr. Winks demonstrates his amazing ability to misinterpret (deliberately or otherwise) almost anything he reads. Is that merely a claim I make? Well, let's see. Let's look at THE EVIDENCE:

[quote="Stephen Winks"]

Lucullus aka John Olsen,

I am delighted to respond to your ridiculous arguements.

If you are teaching your insurance "students" to have the same distain you have for fiduciary standing, you are a dangerous man in institutionalizing the subversion of 800 years of common law that informs us on fiduciary duty. You are precisely why Dodd-Frank is required to restore the trust of the investing public. You say you are an adviser with several exceptions which by definition preclude you from being an adviser. You just do not want to get it, because it renders obsolete everything you are apparently teaching.

He ASSUMES that I have disdain for fiduciary standing, despite my repeated statements that I have nothing against the imposition of an APPROPRIATE fiduciary duty. I bear that duty when I act as an Investment Advisor, and I am perfectly willing to do so. He says "you say you are an adviser with several exceptions which by definition precludes you from being an adviser".

That totally false statement is based on Mr. Winks' evident belief that if one EVER serves as an investment advisor, one ALWAYS does so. He may believe that, but it's NOT true. "Dual registration" - as (a) a registered representative and (b) a registered investment advisor/advisory associate is common in the financial services industry. As anyone who actually works in this area knows, the standard of care is NOT the same for registered reps as it is for investment advisors. Mr. Winks seems to believe that it not only should be (that is, the rules should be changed to make it so), but it already. A case can be made for the former; the latter is simply a false belief, absurd on its face. Why would Mary Schapiro and so many others call for a "unified" fiduciary standard, or for "harmonization" if there were only one standard in place?

1. You state that advisers must have direct custody of their clients assets is somehow connected to the adviser's ongoing fiduciary duties which could not be further from the truth. Though you characterize me as being clueless, this clearily exhibits you have no understanding of how to facilitate or use large scale institutionalized support for fiduciary standing. I might add that Bradley T has the same misconception. If you don't know how this is done, I will be glad to inform you, your broker/dealer or custodian.

I have NEVER stated anything of the sort. I have addressed Mr. Winks' often expressed belief that "the" fiduciary duty includes, as an indispensible element, custody of assets. That's not true. That belief, that Mr. Winks now condemns, is his own, not mine and not Bradley's.

2. Your "out" for circumventing your fiduciary duties is to engage your services to evaluate insurance solutions and to report your findings. Technically, you are not selling anything. You are just charging a fee for service. If your client acts on your recommendation, you are just selling an insurance contract, book your insurance commission and have no ongoing accountability for how that recommendation affects the client on an ongoing basis. The incentive is for you to maximize commissions selling the highest cost alternatives, because there is no fiduciary responsibility to act on behalf of the client in the client's best interest. Managing cost on your client's behalf is not even a consideration under a suitability standard. Thus, you and insurance trade groups are opposed being held to the fiduciary standard because the transparency of cost and compensation is unwelcome.

The first sentence of the above paragraph is sheer invention on Winks' part. It's also ridiculous. He begins his fantasy by saying that the business mode (which he falsely attributes to me) involves an engagement to "evaluate insurance solutions and report..findings. Technically, you are not selling anything. You are charging a fee for service". But then he says that the client accepts the recommendation, I AM selling and I "book" my commission.

I don't know where Mr. Winks got this bizarre notion, but his belief in it demonstrates that he knows NOTHING about life insurance sales (or, as he has already demonstrated, how financial advisors work) in the real world. That is NOT how insurance agents work. If I work as an agent, I get a commission. I don't charge a fee. Indeed, I am not permitted, either by MO insurance law OR my broker/dealer's rules, to charge a fee in this situation. And I am subject to the "suitability" standard of care. (He got at least one thing right; when an agent sells a policy on a commissioned basis, he or she is NOT acting as a fiduciary. Even a broken clock is right twice a day).

As I have stated before, I believe that some changes need to be made in the "commissioned insurance sales" model. Disclosure of commissions makes sense. (I've done so for many years). However, a fiduciary standard that obliges the agent to "sell only the best product" is fatally flawed. Who would determine that? What, indeed, makes a product "best"? (Hint: It is NOT necessarily the product with the lowest premium, per dollar of insurance benefit). How would that standard work when some products may be sold only by agents of that company?

There are LOT of reasons why the fiduciary standard that makes good sense when applied to a portfolio manager makes no sense when applied to an insurance agent. One of them stems from the mistaken notion that an agent ought to have an "ongoing accountability for how that recommendation affects the client on an ongoing basis".

Most agents want long term relationships with clients and are very happy to provide ongoing service. But not all consumers want that. Some DO NOT and SAY SO. Moreover, the way the industry works now, Joe could sell Ann a policy that, several years later, Joe COULD NOT service because the insurer will not provide him with policy information OR accept any information requests from him. Many carriers will terminate the contract of an agent who has not sold enough of its products on an ongoing basis. Would Mr. Winks really want an advisor to have to sell products from a given company just to be able to service the ones he or she sold earlier?

I am very concerned that your "insurance students" would find humor at taking preverse advantage of misinforming the consumer on insurance applications without cost and compensation being a consideration. You are placing the best interest of the insurance agent ahead of the best interest of the consumer.

Mr. Winks ASSUMES that my students are "insurance students". As usual, he's wrong. Most of them are financial advisors. Some are accountants; some are attorneys. A large portion of the people to whom I give lectures sell NO products. And I can assure Mr. Winks that NONE of my students has ever taken "preverse" advantage of a consumer. (Does this guy even read the stuff he writes?)

In case you wish to to use this narrative for instruction--principled advisers actually act in their clients best interest and are responsible for every recommendation they have ever made, this is continuous comprehensive counsel required for fiduciary standing which entails very specific ongoing fiduciary duties. All of this is required by statute, case law and regulatory opinion letters, is based on 800 years of common law and is universally opposed by insurance industry. You just do not want provide the acknowledgement of ongoing fiduciary duties required or the transparency in cost and compensation required for fiduciary standing.

Does Mr. Winks really believe that I, or anyone, would wish to use his narrative for instruction? For amusement, sure. But instruction? Instruction in what - delusional thinking? He seems to believe that if he continues to post the same verbiage over and over again ("800 years of common law"), it will acquire both relevance and credibility. He still refuses to acknowledge the obvious fact that NOT EVERY ADVISOR IS A PORTFOLIO MANAGER. Some of us don't manage the portfolios of clients for whom we do FINANCIAL PLANNING work because THAT IS WHAT THE CLIENT WANTS.

The bifurcating a recommendation into research and taking action (the sale) based on the research, in order to circumvent accountability for the recommendation and avoid ongoing fiduciary responsibility is the deceitful abuse of the consumer. If you were truely interested in your client's best interest, wouldn't you choose to act in a fiduciary capacity for all your recommendations to include insurance sales. This arguement is irrefutable. Perhaps your "insurance students" would find this amusing as well.

"Straw man" again. Winks ASSUMES that his opponent engages in certain behaviors for nefarious motives. He has no evidence of this, but he ASSUMES it. He then condemns it. In this case, as in so many others, he is dead wrong. I don't know who might work on the basis that he describes so clumsily in that first sentence, but I sure don't.

3. The fact you would have difficulty in defining "best product" explains why you are opposed to fiduciary standing as it applies to insurancwe sales as you would have difficulty with statutory requirements for transpatrency in cost and compensation.

The fact that Mr. Winks clearly feels that defining "best product", when it comes to insurance products, is NOT a problem reveals how clueless he is as to how insurance products work. Perhaps Mr. Winks would favor us with his methodology for determining, for a given client, which life insurance product is "the best". How, SPECIFICALLY (not merely in terms of boilerplate verbiage, but in specific, clear steps) does HE do that?

Try as you may to change the subject through disparagement and mis-characterization, you have still difficulty reconciling your insurance centric views when it comes to insurance sales as applied in a fiduciary construct.

"Insurance sales as applied in a fiduciary construct" is Mr.Winks' invention. He creates this fantasy and then chides me for having difficulty reconciling my Real World views with it. (This just gets funnier and funnier. For the record, his last posting will definitely make the agenda of a workshop I'll be doing later this month. And I'm sending it to a friend who teaches at St. Louis University. He spends a lot of time discussing critical thinking with his students, and that posting is a gem for that purpose).

Consumers should have confidence that their adviser is indeed an adviser and the adviser is in fact acting in the consumer's best interest. You can not factually provide those assurances when it comes to insurance--based on your own assertions.

Would you care to disagree, based on facts, not disparagement, not changing the topic?

I have found Mr. Winks' dithering attempts at logical argument appalling, but often amusing. But, as he is clearly incapable (intellectually or ethically or both) of recognizing the sheer silliness of his musings and determined to misinterpret, invent, and distort in order to promote that silliness, I think I'll let him rave. Because you cannot educate the ineducable or open a mind that is welded shut from the inside. And because, while ignorance is curable, you can't fix.... Well, let's just say that Mr. Winks is "challenged".

[B Smith]

This is such a dangerous question.

Look. Let's just say our community is like America. Half liberal, half conservative (though by what I see in our leadership, I think the advisory community leans liberal).

We're each going to answer that question in our own way. The majority will say what they do serves the client. I say it hurts them to remove choice and increase cost.

They look at regulation as the answer. I point to countless harms it has done to the investor.

They only have government intervention as the solution. They advocate always 'more' money for these programs.

Their solutions have never worked, but 'they' (liberals and conservatives) aren't groups that realize that.

The whole topic is a waste of time with this bunch. They don't understand economics and politics as much as they like to believe. The power of recommending what people do with their lives goes to your head. People that don't have the ability to understand the consequences of their actions feel they have A LOT to contribute to this conversation. They don't.

[Stephen Winks]

Lucullus aka John Olsen,

Nice try. Could you actually try to answer the question.

You may try to change the topic by deceitfully and untruthfully suggesting that I would ever suggest the RIAs must have direct custody to fulfill their fiduciary duty which is a total and complete fabrication manufactured by you.

Now back to the topic.

Your research engagement arguement, bifucating the evaluating insurance applications from insurance sales, is simply a ploy to circumvent ongoing fiduciary duty. Because you charge a fee for your insurance evaluation, it is just fee for service, no sales are involved. You then seperately sell insurance for a commission without incuring any accountability for the recommendation or requiring ongoing fiduciary duties because you are acting as a broker. By seperating the recommendation from the sale--do you not avoid ongoing fiduciary duties associated with your recommendations? Thus the proof of your disinterest in the consumer's well being is clear.

If you were indeed interested in acting in the client's best interest in insurance sales, why not acknowledge the ongoing fiduciary duties associated with your recommendations and execute your insurance recommendations as part of your advisory services? If you were truely acting in the consumer's best interest in insurance, then why wouldn't you want to be held to a fiduciary standard. The answer is obvious. By assuming fiduciary responsibility you would be accountable for your insurance recommendation, would have significant on going fiduciary duties required of you in the consumers best interest and you would have to be totally transparent in cost and compensation--none of which is required if you seperately act as a broker (charging a commission) on insurance sales incuring no fiduciary responsibility and ongoing accountability.

Do you actually think, anyone knowledgable in the financial services industry doesn't see through your clever legal ploy to avoid being held to the fiduciary standard when it comes to insurance sales. It is dispicable that you would sincerely suggest that you are even remotely acting in the consumer's best interest when it comes to insurance sales.

If you would like to argue to the contrary, I am more than happy to further expose the falacy of your arguements.

Who is clueless now? The point is I do have a clue and love exposing your false representations of your actually being even remotely interested in acting in the best interest of the consumer.

I bet you will try to change the topic or disparage me, but will not directly answer the question.

By the way, a universal harmonized fiduciary standard articulated in Dodd-Frank renders your arguement moot--that is Congress talking , not me.

SCW

[Lucullus]

Why does this guy even bother trying to argue with anyone? He can simply ascribe flawed or downright wrong positions, practices, and beliefs to that person and then condemn them. He does that anyway; why not eliminate the "middle man"?

I've had quite enough of his disavowal of his own prior statements (he DID insist that custody and discretionary duty are elements of fiduciary duty AND that you're not acting as a true fiduciary unless you accept both) and his inventions of positions that he claims I hold (such as his bizarre fabrication as to how I work as an insurance agent). He is no longer amusing.

Unable to refute the arguments of his opponents, Mr. Winks simply substitutes his own fabricated positions, attributes those to his opponents, and argues against his own creations. (Example: I do not sell insurance in the fashion that Mr. Winks believes. He made that up). Unable to defend his own absurd assertions, he denies having made them (he DID claim, repeatedly, that custody and discretionary duty are indispensible elements of fiduciary duty. Bradley first pointed out the absurdity of those claims and demanded that Mr. Winks acknowledge their falsehood. Mr. Winks did not respond, as if his own falsehoods would simply disappear in time. As I have continued to point out these same falsehoods, he's now decided that he never made those claims, that they were actually mine. Those who have been reading these forums for some time know who made those claims. So does Mr. Winks, but he cannot or will not acknowledge his own blunders.

In short, Mr. Winks denies his own statements when they're shown to be false, and invents false positions for his opponents. When caught, he simply repeats the lies. Sen. Joe McCarthy would be proud. Hell, Joseph Goebbels would applaud.

I won't. I enjoy debating serious topics with people holding other views, because that's how we learn. But only when all participants can distinguish accuracy from inaccuracy, the logical from the illogical, and are interested in discovering the truth of a proposition. Mr. Winks fails to qualify on all counts. In revealing his own contempt for the truth, he has earned my contempt. In his sanctimonious preaching about integrity while engaging in argumentative antics that would embarrass a snake oil salesman, he has revealed his own absence of integrity.

Mr.Winks is free to invent whatever positions or arguments he wishes and ascribe them to me. I cannot prevent that. But I surely do not have to encourage that by continuing to debate with him as if he were worthy of respect. He is not and I will not.

- John Olsen

[Bradly T.]

Succinct and on-point post by B Smit....."I think the advisory community leans liberal"...... Hadn't considered that but certainly anyone who believes Big Brother should and can manage access and choice are liberals by definition. Any evaluation of factual history would suggest that regardless of the "should", the actual ability to effectively and efficiently apply big brother "solutions" makes "can" the operative word here. Must agree that those working hardest for a government fix understand it's their only hope since competition and free markets will NOT deliver their agenda or results. While it is fair to argue for what one perceives to be "right", pragmatism would suggest spending more time on what's "real". Idealism is fine until it conflicts with realism. Or until it is hijacked by the self serving for their own purposes....ala Mr. Winks, who claims to care for consumers but acts against their best interests by reducing access, choice, and competition in favor of the elite and against the interests of the great majority but who's product will pop if he can just get the right legislation and regulatory priorities managed his way. Get real...ain't gonna happen.

[Stephen Winks]

Lucullus and Bradley T,

There is a difference between legal and ethical, you just haven't got the ethical part down.

Less disparagement and more facts (if you have any) would help your arguement.

My case is irrefutable.

SCW

[Bradly T.]

Only a mad man would claim their position was irrefuteable....not many facts are that let alone someone's very refuteable rhetoric and misinformation; such as:


Your prior and repeated assertion (not true) that all fiduciaries must have custody and discretion.



Your prior and repeated assertion (not true) that no fiduciary can use mutual funds (must have securities or indexes only).



Your prior and repeated assertion (not true) that the ERISA standard is THE fiduciary standard (singular) resulting from 800 years of blah, blah, blah.....



Your prior and repeated assertion (not true) that because there is a fiduciary obligation that all fiduciaries deliver ethics and expertise.



Your prior and repeated assertion (not true) that one without a fiduciary obligation must act contrary to their clients' interests or has no interest in or any professional obligation to consumer interests.



Your prior and repeated assertion (not true) that "in the history of man, consumer interests always prevail in a free market".



These are only a few of your refutealble irrefuteabilities. By the way, these are all posted on multiple threads over the past 3 years....in your words - now THAT'S irrefuteable for sure.

[Stephen Winks]

Bradley T,

Would you please be so kind to point out just one occasion, any occasion, in which I have ever suggested that advisers have to have direct custody of client assets in order to act in a fiduciary capacity.
I will not let you divert attention by trying to change the topic.

My arguement is irrefutable.If you were actually interested in acting in your client's best interest you would support advisers being held to their fiduciary duties when it comes to insurance applications. Why wouldn't you support fiduciary standing, if it is in your client's best interest.

Your rationalization of bifracting insurance recommendations from insurance sales is simply to avoid fiduciary responsibility which would require you (a) to be responsible for your recommendations, (b) to fulfill your ongoing fiduciary duties on every insurance product you have sold as advisers do on every investment ever sold, and (c) to provide transparency in cost and compensation required for fiducuary standing. By acting as a sales agent under a suitability standard in selling the insurance products you recommend, none of those fiduciary duties serving in the consumer's best interest are required.

Could you please refute these facts?

If not, why not just say you could care less about the consumer once you have sold your insurance contract and have earned your commission as you have no ongoing responsibility under a suitability standard. Dodd-Frank corrects this. If you cared about the consumer, you would acknowledge fiduciary standing, be accountable for your insurance recommendations, provide ongoing fiduciary duties in the best intererst of the consumer and would be totally transparent in cost and compensation--none of which you presently perform, all of which is required for fiduciary standing. This is not because I think so, it is because it is required based on 800 years of common law, statute, case law and regulatory opinion letters.

You simply can not abide by being held to objective, non-negotiable fiduciary criteria. Yet, you have the gall to say you are an adviser when it comes to insurance and are acting in the consumer's best interest. This is bait and switch, which is not only misleading but is unethical. Acting as an adviser for investments which entails fiduciary standing, does not mean you are exempt from fulfilling your fiduciary duties when it comes to insurance. Advisers have to fulfill their fiduciary duties in perpetuity on every recommendation they have ever made. To say you are a fiduciary except for insurance like saying you follow the ten commandments with a few execptions. This is why the investing public has lost confidence in the financial services industry. The consumer's best interest must come first and foremost, which is the subject of this thread. Clearily, you are not putting your client's best interest first and foremost, otherwise you would acknowledge fiduciary status and perform the necessary fiduciary duties. It is absurd that you would even suggest you are an adviser when it comes to insurance sales.

SCW

[Bradly T.]

I might agree with you or disagree.....if I sold insurance.

[Lucullus]

Bradley,

Are you having fun now? Clearly, you can refute a statement made by a person, in the mind of that person, if he believes that his statement is irrefutable. It's as pointless as trying to demonstrate to a Flat Earther that the earth is not flat. Your refutation will be ignored because it contravenes a belief that, in the mind of the Flat Earther, is incontrovertible by definition.

Winks has stated -

"There is one fiduciary standard. The determination of fiduciary standing is relatively easy. It essentially requires broker/advisers to be properly resourced by their broker/dealer or custodian so advice is safe, scalable and easy to execute. This requires (a) a prudent process (asset/liability study, investment policy, portfolio construction and management) with an audit path to statutory documentation to assure objective third party experts that the adviser is fulfilling their fiduciary duties which makes advice safe and scalable as a business enterprise, (b) advanced technology that supports continuous comprehensive counsel and transparency in cost and compensation required for fiduciary standing, (c) work flow management tied to a functional division of labor (adviser, CAO, CIO) so the expert advice is both safe and easy to execute, (d) conflict of interest management as disclosure does not remedy the conflict, thus making fiduciary standing in the client's best interest possible, (e) expert advisory services support for each of the ten major market segments advisers serve. With this type of large scale institutionalized support for fiduciary standing, every adviser could act in a fiduciary capacity if their clients prefer their adviser to act in their best interests." (Winks' posting 2 Dec 2010)

Apart from the opening falsehood, that's a pretty fair description of the fiduciary standard that applies to portfolio managers. It does not and cannot properly apply to insurance agents or any other advisor who does not manage a portfolio. Winks just will not accept that portfolio managment is a subset of financial planning or that some financial planners /advisors DO NOT manage portfolios.

He has also stated "it is not possible for you to use mutual funds and provide continuous comprehensive counsel required for fiduciary standing as holdings data is only available quarterly" (Winks' posting 30 March 2011)

That isn't just wrong; it's ridiculous. By that daffynition, every manager of an advisory account who, for a fee, renders personalized investment advice to a client and who manages that client's portfolio of mutual funds is NOT a "fiduciary". Yet Mr. Winks has been hollering that every advisor MUST BE a fiduciary. So I guess, in the Winksian mind, all those folks will have to sell all those mutual fund positions (whether the client likes that or not) and buy individual stocks and bonds.

All in the name of "putting the client's interest first". Yeah, that makes LOTS of sense!

He proceeds from an absurdly rigid and limited understanding of how advice is and should be rendered (he's NOT a practicing advisor - for which financial consumers should be immensely grateful) to treat everyone else's views as equally absurd, even if he has to manufacture those views.

How many times has he invented positions for others? Many times. He has described how he THINKS I act when I am acting solely as an insurance agent. He's dead wrong. He hasn't a CLUE as to how I work. I have stated, over and over again, that when I act AS AN INVESTMENT ADVISOR, I am subject to fiduciary duty, but that when I am acting as an insurance agent (for a client who has NOT retained me as an investment advisor [which WOULD trigger fiduciary duty for ALL my actions on behalf of that client, subject to the advisory agreement], I am subject (under current rules) to a different standard.

How does he process that information? He simply ignores it and substitutes what he wishes me to have said (that would support his gross misrepresentation). You are dealing with someone who has ZERO respect for the truth. An ideolog with much passion but no integrity.

Perhaps the saddest element of this whole debate is that there may be people out there who believe his nonsense. Well, so be it. You cannot educate the ineducable and you can't fix stupid.

- John

[Stephen Winks]

Lucullus aka John Olsen,

Nice try. I have never, as in ever, said that direct custody is a requirement for fiduciary standing.

If you can refute my arguement please do so. If you can not, it is irrefutable.

So far, you insurance guys are long on disparagement and short on facts and most especially veracity--you will say anything. It doesn't matter if it is true.

Disparagement may work for you in your local market where you assinate the character of your local competitors and represent yourself as fiduciaries clean as the driven snow, acting in the best inteterest of the consumer. Of course, I have definitively proven otherwise in this very thread--which you will not and can not refute. I only hope that those whom you have disparaged locally can turn the tables on you by simply asking a few very direct questions concerning your insurance sales.

Mr Olsen says he is a fiduciary acting in your best interest except concerning insurance sales:
1. Would you like Mr. Olsen to act in your best interest when it comes to insurance sales as well? If so, why wouldn't Mr. Olsen acknowledge in writing his fiduciary standing when it comes to insurance sales.
2. Advisers are held to the fiduciary standard of care and are required to act in the consumer's best interest. Mr. Olsen is not acting in a fiduciary capacity when it comes to insurance sales and has no responsibility for his insurance recommendations. Would you like Mr. Olsen to be accountable for his insurance recommendations which would be required if he were acting in a fiduciary capacity, acting in your best interest.
3. Advisers are responsible for every recommendation ever made. Mr. Olsen, acting in a sales capacity as an insurance agent, has no ongoing responsibilities after the insurance sale is consumated and is paid his insurance commission. Would you like Mr. Olsen to be accountable and continue to monitor and manage his recommendations in your best interest, not his? How would Mr Olsen know if his recommendation still made sense, whether you are paying too much for your coverage, whether changes in law or your circumstance, sure to come, would affect his judgement and change his regommendation? Isn't that what an adviser is supposed to do, but not required from one acting in an insurance sales capacity like Mr. Olsen.
4. There are significant ongoing fiduciary duties required by advisers, none of which are provided by Mr. Olsen because he is acting in an insurance sales capacity. Would you like the comfort of Mr. Olsen acting on your behalf in your best interest in managing his recommendations, as advisers are required?
5. Acting in a sales capacity under a suitability standard, the cost of the insurance products he recommends is not a consideration, yet under a fiduciary standard of care managing cost on behalf of the consumer in the consumers best interests is an important fiduciary duty. Would you like Mr. Olsen to act in a fiduciary capacity when it comes to insurance sales so he is required to manage cost on your behalf, in your best interest?
6. Fiduciary standing requires advisers to be totally transparent in cost and compensation. Insurance salesmen acting under a suitability standard are not required to even disclose cost and their compensation associated with insurance sales. Would you like Mr. Olsen to act in your best interest in disclosing cost and compensation?
7. The questions which would clarify your insurance sales role are endless....

If you were acting in an advisory capacity in insurace applications, fulfilling your fiduciary duties, we would have no disagreement. But you are not providing fiduciary protections to your clients when it comes to insurance sales thus the disagreement on whether you are acting in an advisory capacity when it comes to insurance sales.

I am still waiting for you to refute the irrefutable. Facts please.

I have 800 years of common law, and objective, non-negotiable statute, case law and regulatory opinion letters in support of fiduciary standing on my side.

You just make unsubstantiated claims and an odd insurance centric view of fiduciary standing inconsistent with the traditional understanding of fiduciary duty which Dodd-Frank resolves.

SCW

[Bradly T.]

A brief archive search on this board reveals a minimum of 5 occasions where Winks did claim that no fiduciary can act as such without custody and discretionary authority and cannot use retail mutual funds (since their positions cannot be known now but only quarterly - he has actually and repeatedly called for retail funds to be banned!). He writes this stuff himself doesn't he? Or does he use a ghost writer? Or he's an alzheimer patient? He refutes his own "irrefuteable" positions - written down and archived for all to see....over and over again.


While a speaker can try to hide or evade prior misstatements or inconsistancies, it is difficult for one WHO WRITES THEM DOWN to deny them and yet Winks does. It is his only consistancy really. Over the past 3 years, his definition of fiduciary - who is one, who is not one, what that might mean, and the legal history of such - has been a convaluted shape changing distortion to fit his arguement dujour.



What we're all missing (still) is the harmonization potential for on-going and not on-going and what, precisely, does on-going mean? Is an annual review and reallocation based on rebalancing needs, changed priorities, etc. address on-going? What about clients who won't schedule quarterly or even annual reviews? My firm does send out a "confirmation" of status and priority to every client to confirm "on-going suitability" of positions held. I offer every client an appt. every quarter to review and update planning data and future outcome illustrations. I meet with many every fall for their annual benefit elections at work. I manage many of their cash reserves and portfolio cash flow incomes. The only other issue, besides on-going obligations is legal recourse of clients - litigation or arbitration? Never been subject to either personally and plenty of reasonable arguement for both sides here (Canada has an amazing arbitration system for many industries with good marks from all sides - except trial lawyers of course). How different will my life be once the harmonization is complete?? Not all that much I don't think. I think I can live with it.



Which means for sure that an RIA's fiduciary duties WILL change - they will be lesser and lower than before. I'm afraid that extends to those with discretion and custody.....which is the consumer protection failure of all this. Those who need MORE scrutiny and review will have less. This issue may (and should IMO) simply fade into background noise once those in charge of harmony finally determine it is as nutty as it surely is and as irrelevant. One can easily strengthen the disclosure and suitability obligation and arbitration side of the industry without making two that are different into one that is (not) the same.



After all, wasn't DF supposed to address the causes of the swan and prevent another? What has any retail distribution behavior, results, or rules have to do with THAT!!?? Typical DC piggy-backing....with the help of the noncoalition.....deck chair shuffling - appear busy and ernest while avoiding the root issues and the real work at hand. It is not at all clear that ANY clients' interest are on the table here.....this is purely turf and market share wrangling. RIAs, Winks, Veres, and the Noncoalition have tried like hell to kill commissions - pure and simple - in the name of consumer protection to be sure but against the best interests of the vast majority of the investing public. This group-think action was coalesed into a power play which backfired big time!! And they have made some powerful enemies (FPA membership declines dramatically while FSI surges is only a tiny response so far), including in Congress and on regulatory boards. Their pain and suffering is just beginning. Their loss is total. Their position without respect or regard.



So, who's interests should come first?? NOT those self dealing special interests to be sure. Those who preach but do not practice, those selling memberships and books and solution products - NOT YOU!! If one believes in the power of competition within truly free markets and doubts Big Brother's skill (regardless of intent) - you may relax. Historically, this is a bad point in time to ignore the amazing evolutionary progress competition HAS already delivered to the market over the past 5 decades. (Did you know MET advisors sell more PRU VAs than any other? Or that the indie channel is by far the fastest growing distribution network with no trading comp, no proprietary, no shelf pigs with lipstick, no quotas or free trips, etc.?) Investing is democratizing - my parents once had passbook savings, savings bonds, and CDs as their only options; they now own thousands of securities in hundreds of global industries and market segments with their small nest egg. Where's the beef?



We should all do everything possible to elevate both personal and industry standards for professional expertise and ethics. We should all care about and take care for our clients' future outcomes and financial security. It's ok if we disagree on how best to do that and if it takes some time, some errors, and additional changes to come.....that's ok too. But to ignore progress made and act foolishly and pull the proverbial half-cocked trigger, simply in the name of haste, is not needed or wanted....by anyone - especially our clients.

[Lucullus]

Bradley,

The absurdity continues. On one hand, he deplores the FACT that an insurance agent, acting as such, is NOT subject to fiduciary duty. On the other, he asks "why wouldn't Mr. Olsen acknowledge in writing his fiduciary standing when it comes to insurance sales"

(Evidently, Mr. Winks is fully capable of holding two mutually contradictory beliefs at the same time).

But, as to that question, how about this:

"As Mr. Olsen doesn't have fiduciary standing when it comes to insurance sales, he deems it inappropriate to declare, in writing, that he does!" DUH!!

As I have said before, the "suitability" standard of care for insurance agents DOES need revision. I am in favor of mandated commission disclosure. That being said, I am NOT in favor of mandating a standard of care that will not work for insurance agents, such as requiring an agent to sell only "the best policy", because "the best policy" is not objectively determinable. One can determine whether the policy recommended is "suitable", of course, and recommend only a policy that meets that test, but existing rules already require that! If Mr. Winks believes that he has a metric that will reveal "the best policy" in every situation, he should share it with us. In fact, I asked him to do so, but he has failed to respond.

In am in favor of placing insurance agents in a form of fiduciary duty - one which would codify an obligation that ethical insurance pros (and the overwhelming majority of insurance pros I've met in 38 years in this business are highly ethical) already abide by - putting the client's interest first - PROVIDED THAT this obligation can be squared with the duty of agency that an agent owes to the insurance company. This is something that will have to be worked out.

This "insurance agent fiduciary duty" would also require transparency (which, again, most pros already provide). That should include a disclosure that the insurance agent is NOT acting as a fiduciary. If that is what Mr.Winks was rooting for, it's fine with me. Most of us already make that clear. But a formal document to that effect is a good idea (which is why a task force I am a member of is including that in our recommendations regarding "standard of care" policies to our professional organization).

But it would NOT impose an ongoing duty of care beyond that which is reasonable. As I've noted, it's impossible for an agent to provide ongoing care with respect to a policy if the issuing insurer will not provide statements to that agent or even answer policy inquiries from him. Does this happen? Insurance pros know that it happens all the time. Insurers regularly cancel the agent appointments of agents who haven't met a "volume of business" quota. How would Mr. Winks deal with that problem? (We don't know. When I asked him, he didn't answer).

It would also NOT require ANY duty to oversee the client's entire investment portfolio - for the very simple reason that this is not what an insurance agent does. Does Mr. Winks believe that we ought to REQUIRE every applicant for insurance to give us management authority over his or her entire portfolio? It would seem so, as he seems determined to apply the "portfolio manager" form of fiduciary duty (which he claims to be the SINGLE fiduciary duty) to insurance agents.

It comes down to this: Mr.Winks wants - indeed, demands! - not only that every insurance agent and registered rep behave like a portfolio manager, but also that every consumer allow him or her to do so!

And that is a truly perverse - not to say perverted - version of "putting the client's interest first".

- John

[Stephen Winks]

Bradley T and Lucullus,
Nice try boys. Your false "custody" diversionary tactic is immaterial and does not work. Every reader of this tread is on to you.

When I have definitively proven your deceitful representations to your clients that clearily establish you are not acting in the consumer's best interest--you have no response. You can't refute the irrefutable--which has you rightfully squirming.

You guys are the poster children for ruining the trust of the investing public has in both brokers and advisers by falsely claiming to be an adviser and by misrepresenting your services to consumer. Further your common practice of disparaging your fellow advisers in the communities in which you work, greatly contributes to the destruction of the confidence of the investing public in the financial services industry. You are the very people that Dodd-Frank was directed at. Transparency exposes your self serving misrepresentations as I have proven and will greatly elevate the reliability of the information you advance.

As for your research citing five occasions in which you say I specifically stated advisers must have direct custody in order to fufill their fiducuary duties please provide exact quotes, dates and time. It doesn't exist. You citations are either obtuse or inaccuratte extrapolations--they do not exist.

SCW

[Bradly T.]

Evidently, Mr. Winks is unaware of the Board search engine. Enter "continuous counsel" and "mutual funds" with "*winks" as author. Many entries claiming (and well rebutted by Tad by the way) that IARs are not fiduciaries and retail funds are not a fiduciary's option and that streaming real time positions for moment to moment trading and evaluation within and by the RIA are requirements for fiduciary obligation. None of this is true but it has been written by Winks dozens of times (I knew my 5 estimate was low). Winks has changed his rhetoric quarterly for the past 3 years to "harmonize" his "beliefs" with DF but his position was far more brittle and precise prior to his loss of credibility and once his position was hopeless relative to new regs. But one must be careful what one writes...the lack of consistancy is one of his biggest problems....too many others to get into here.....and they're well demonstrated.....repeatedly.

[the observer]

I stopped feeding the Troll a long time ago because it's a pointless exercise in futility... However the following Winkyism made me just a little curious:

To Bradly and John, Quote: "When I have definitively proven your deceitful representations to your clients that clearily establish you are not acting in the consumer's best interest--you have no response."

Since the Winkster has no idea who Bradly is and no access to John's clients, I'm wondering just how the hell he manages to achieve this incredible feat for which our two posters have no response?

Please don't bother to try and explain though, It's a purely rhetorical question and not a conversation...

[Stephen Winks]

Bradley T,
HOW ABOUT AN APOLOGY !!!!

So you can not indeed find one instance where you say I have stated "to use your exact quote" that "brokers must directly custody assets in order to fulfill their fiduciary obligations."

As for Lucullus aka John Olsen, I definitively prove he is misleading in representing himself as an advisor, and he suddenly has no comment.

John Olsen, an apology is in order.

SCW

[Bradly T.]

I'm not nearly eloquent enough to apologize for you Winks, wouldn't know where to begin and when to end. It's never been my claim Winks but yours that even RIAs are not and cannot be fiduciaries without custody "continuous comprehensive counsel", defined further by you as meaning directly held and managed positions for minute by minute knowledge of all positions held by all clients at all times for frequent and immediacy trading. And that IARs are not, have never been, and can never be fiduciaries as they/we are simply "selling" a nonfiduciary, managed account service. And that retail funds cannot be used by any RIA since they do not provide "continuous comprehensive counsel" ability since the advisor does not choose the positions or apply the buy/sell discipline or know precisely what's held when by the fund manager. These lies have been well documented by you yourself Winks, not by me. Did you run the search engine? You've been very prolific the past 3 years, if inaccurate and insulting the whole time. No one to my knowledge ever claimed brokers to be fiduciaries.....well, except you.


John - could YOU apologize for Winks?....I just ain't got the mustard for it.

[Lucullus]

Observer,

He managed that feat by the simplest of logical fallacies - circular reasoning. You assume, as fact, the thing that you seek to prove is true. Works every time. Of course, it won't convince anyone over the mental age of eight, but that doesn't seem to bother the Winkster.

Bradley, you ask if I can apologize for Winks. Did you mean apologize to him? If so, no apology is necessary; if not, no apology would be sufficient.

- John

[Stephen Winks]

Lucullus aka John Olsen and Bradley T,

Just as I expected. No sense of propriety, no understanding of decorum, no common decency. No wonder you feel you can misrepresent yourself as advisers with inpunity. You just don't care whether what you are saying is true or not.

What an embarassment for the industry.

Under Dodd-Frank you will have to defend yourself, my only hope is the consumers you have mislead will find a way to seek damages--as the harm you have caused is massive.

SCW

[Bradly T.]

I believe the libel line just got crossed. I have not misled clients or made any misrepresentations of any kind. Never been to arbitration and have no client complaints and have always acted in what I believed to be and document to be in my clients' interests. Only you Winks have ever accused me of any malfeseance....watch yourself. Such a public accusation is grounds for action....you better have some proof of your outlandish and libelous public claims.


Back to the discussion of whose interests should come first - whose interests SHOULD come first is the little guy - by far the greatest majority of investors and account owners. Those with less than $100k and $50k and yes, even $10k by account registration. The current "debate" in DC and here is a demonstration of national and institutional ELITISM. Who care what best serves the wealthy? Let them choke on their money and their anxieties....who cares? Politicians and Wall St. and big RIAs - that's who. The remedy sought to "protect" the wealthy will be against the best interests of the unwealthy. The Smalls get run over (again) in the interest of the Bigs.....who can afford to know and act according to their own best interests already.



Whatever excludes is elitist and unAmerican....period. No one, not even me, can or will accept or keep small account holders if and when managed accounts is the only platform. Wirehouse and RIA minimums are already going up, above $250-$500k per registration!!! I cannot afford to lose money with the majority or even some of my accounts. There is no mechanical structure for even approaching the call for managed accounts exclusively. The whole fiduciary debate is pure red herring.....retail distribution had nothing to do with the collapse and investor confusion/financial illiteracy is no reason to act against investors best interest which lies only with competition, choice, and access.

[Stephen Winks]

Bradley T,

The facts are the facts, just replaying your own statements.

Do you really want to testify under oath, where your testimony requires truth?

I can defend everything I have said. How about you? I think your research will find you have made some pretty embarassing statements.

The "elitism" you cite suggests your disconnect with with the well being of your clients--which literally requires fiduciary standing. This is nothing more than making brokers transparent and accountable for every recommendation they have ever made subject to an objective non-negotiable fiduciary standard based on 800 years of common law. There is nothing new about this that remotely implies elitism if one has in fact been acting in their client's best interest.

Small investors deserve their best interest to be protected as well. Isn't it counter to your agruement that you actually think you have a different obligation when acting on behalf of small investors? Fiduciary standing required under Dodd-Frank makes no distinction between large and small investors. If fact the level of investment and administrative counsel provided to small investors exponentially increases under Dodd-Frank. Dodd-Frank just introduces modernity into the financial services business, long needed, now required.

As for choice, you have every right to continue to be a high cost low value added broker or your client's may instead prefer low cost, high value added advisors. I totally agree the free market will determine the ultimate outcome, but there has never been a case in the free market where the best interest of the consumer has not prevailed. Your arguement is and has been at odds with the best interest of the consumer. In my considered opinion, it is in your englightened best interrest to align your interests and views with the best interest of the consumer.

SCW