7 Dirty Words for RIAs to Avoid

Every month, I try to determine the most important issue to write about, yet most of the time I end up delving into the seemingly boring topic of regulation. Why? Because I think the massive lobbying effort by the brokerage world and the Financial Services Institute to make FINRA the chief regulator of the financial planning and RIA community poses an existential threat. I actually believe that FINRA regulation would snuff out the creativity and idealism of our profession - and put a lot of great advisory firms out of business, reducing a lot of pesky competition for FINRA's brokerage firm members.

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Comments (8)
These are all wonderful ideas and should be implemented immediately. The first thing that should be done is to remove any linkage between the words "registered" and "investment advisor" so as not to confuse the public. Simply put, advice is advice is advice and had best be regulated. Don't make the public become aware that there are RIAs and "others".

Now fee-based is another thing which needs to be clarified. It seems that it says the advisor has a practice based on fees, not exclusive or only. Wait - maybe Mr Veres should also reconsider the term fee only and decide what "only" means. the dictionaries seem to agree that it means "and no one or nothing more besides; solely or exclusively." nor "alone of its or their kind; single or solitary" . We have come to realize that in the world of the RIA, only may mean "almost", "nearly", "maybe" and in some circles, "huh?".

Why don't we simply allow our legislative and regulatory bodies to do their
jobs and maybe we will come out with a industry more in harmony, serving all the public.
Posted by ConsumerAdvocate | Monday, March 03 2014 at 2:59PM ET
I agree 110% with your views Bob! Well stated. I spent almost 28 years in the "FINRA" space where it is clear the broker, banker and management of both are clearly conflicted when it comes to the "best interest" of the client. Moreover, FINRA and the bank owned brokerage firms only consider "suitability" not "BEST INTEREST"! The life cycle of a broker is only as long as the next shelf product. And as long as the industry allows product to pay to play and "FUND" the pockets of officials than the battle will continue and gravitate to the have vs the have not!
I will accept your challenge Bob to correct the editors, clients ect for proper description of the REAL ADVISOR over the commission base sales broker!
Thank you Bob for your continued leadership for our GREAT cause and work we as RIA's do for our clients!
Posted by Rick R | Monday, March 03 2014 at 4:12PM ET
Thank you Bob - Since 1986 when EF Hutton one night changed all the stock broker business cards for Financial Consultant (Advisor) the public has been screwed over. I an a CFP and that is an advisor. Call a spade a spade.
Next on to FINRA - Twice in one year I was called up on using the term mutual fund on a TV appearance and told I could not use that term _ asked them to show me where it is written - They sent me 90 pages of legalese BS which did not state it anywhere. I went back at them and they said they would review the situation for a fee - I said go ahead and eventually got the OK. A year later I was on another show and used the term mutual fund - again FINRA in all their wisdom said I can't use the term - again we went round and eventually after another fee it was approved. When are they and the SEC going to go after the bad guys/gals and really do their job? thanks for listening.
Posted by dutchman | Monday, March 03 2014 at 5:27PM ET
Add "book of business" to that list!
Posted by BillWinterberg | Tuesday, March 04 2014 at 8:57AM ET
Let's not forget us little guys who are exempt from SEC regulation but are state licensed RIAs. I call myself a "fee-minus" advisor. If a commission-paying product happens to best fulfill a client's goals, and the client chooses to buy it through me, I refund the planning fee to the extent of the commission. This is in stark contrast to the larcenous quadruple-dippers who charge a flat planning fee, sell a commissioned product, then charge management fees plus a 20% performance fee. Yes, there are still crooks- I mean "advisers" -out there doing this.
I am ever mindful of the possibility of sitting in court with a plaintiff attorney asking me, "Can you demonstrate that this was the best available option for this client at the time?". I'll be able to confidently say, "Yes". I take the fiduciary standard very seriously.
Posted by Gary D | Tuesday, March 04 2014 at 2:14PM ET
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