Just for fun, I filled out the lengthy form - on behalf of Money magazine itself. After all, it, too, was in the business of giving out investment advice.
When I came to the question about how, exactly, is detailed, specific information about clients gathered, I wrote cheerfully: "We don't. We just give investment advice without having any idea about the actual financial situations of the people who are receiving it."
How do you provide your portfolio recommendations? "We mostly recommend hot funds, and never ever tell you when to sell them, all the while having no idea about the current asset allocation mix of the people who receive our advice."
There was a question about conflicts of interest: How are you compensated? I answered: "We get paid primarily by a lot of companies that want to sell their products to the people we give advice to."
What credentials or designations have you earned? "None. Why would we need those?"
What continuing education requirements do you meet on a yearly basis? "Ha, ha, ha" ... followed by a chuckle.
TIME FOR NEW RULES
In just a few days, voters around the country will go to the polls to select a president as well as representatives in Congress. When the dust clears, we will almost certainly have a new SEC chief, a newly constituted legislature and a new opportunity to revisit the fiduciary debate. Our regulators - FINRA, the Financial Planning Coalition and various groups - will finally go into the endgame. By the time the snow melts off northeastern lawns, some combination of these groups will decide how we are going to impose a fiduciary standard on the advisors, brokers and agents who make up the financial services world.
This is crucially important issue for everyone reading this column. But I sometimes wonder whether the effort to protect investors isn't focused too narrowly. The professionals who will (or will not) be fiduciaries offer, at most, a tiny sliver of all the advice received by the consuming public. And, as my little exercise with Money magazine shows, the advisory world is far from being the most conflicted provider of investment recommendations.
Money and its competitors still breathlessly report on "the best mutual funds to buy now," offering different recommendations every six months or so. Cable channels offer nonstop coverage of minute-by-minute market moves, when every bit of research tells us a short-term investment perspective can be deeply harmful to client portfolios. Men and women in business suits routinely predict the future with straight faces.
Stock touts used to be marginal members of the criminal underclass, on a par with touts at the racetrack. Now, they may be celebrities and/or media personalities.
Meanwhile, investors are bombarded with cynical advertising from the large discount brokerage firms, which straightforwardly tell them they can beat the market if they sign on to churn their own portfolios. Even babies can supposedly beat the market with the right trading tools.
All of these visibly harmful channels of advice are not only legal, but even respected in our society. In aggregate, these various frauds and subtle dishonesties get far more attention than the honest advisors who try to give their clients the best advice available without compromise - and who, for the most part, are far better trained to do so. The nonsense put out by investment magazines and websites reaches millions of consumers every day, and they act symbiotically with the television talkers to co-create the dangerous illusion that what happened 10 seconds ago is relevant to your retirement portfolio.
SMARTER QUESTIONS TO ASK
If Congress and our regulators are indeed serious about protecting the best interests of consumers, then perhaps it's time they took a wider view of financial advice. As we close in on a narrow professional fiduciary solution, perhaps, just for a moment, we should take a step back and look hard at all sources of investment advice in America. Then let's ask some simple questions:
* Is the net result of each provider's advice helpful or harmful in light of even the most basic research?
* Should cable stock touts be required to disclose the track record of their prior predictions on a disclaimer that scrolls across the bottom of the screen as they're confidently telling us what will happen next?