Sometimes I think it helps to step back, consider the bigger picture and achieve clarity about what we really want for our profession. With that in mind, I want to share some of my own hopes. You may laugh at these, but I read somewhere that nothing good happens until it is first articulated.
First, I'd like the SEC to stop obsessing over the term "fiduciary" and develop regulatory oversight that intensifies scrutiny for each conflict of interest that a company embraces in routine dealings with consumers. Companies that self-custody, or whose brokers recommend in-house investment options, or make corporate investments in direct competition with their customers, would have every recommendation and client communication scrutinized and evaluated by an alert and skeptical regulator. Advisors who take commissions would undergo regular reviews to make sure their customers understand the sales agenda.
I'd like advisors who voluntarily eschew these conflicts, and practice purely on a fee basis, to simply have to prove that the assets they manage reside safely with a reputable custodian. Let those who voluntarily and routinely embrace conflicts between their interests and those of their customers bear the regulatory burdens without forcing them on everybody else.
I'd like Congress and the regulators (and, while we're at it, the world) to recognize that imposing on non-sales professionals all the regulatory safeguards intended to curb the potential excesses of sales professionals is a fundamentally stupid idea - even if you call it "harmonization." Does anybody want to require doctors to get compliance approval before they talk to their patients about recommended prescriptions?
I'd like somebody to explain why anybody would be better off buying nontraded REITs with high upfront costs when they can buy exchange-traded REITs, with liquidity and a track record, at net asset value.
I'd like to know if anybody who was not paid a generous commission has ever recommended a nontraded REIT - or, for that matter, a limited partnership tax shelter - to his or her clients.
SOCIAL SECURITY & ANNUITIES
I'd like the Social Security system to be revamped so that the real FICA dollars set aside by workers and employers are invested by money management teams of our choosing, creating a powerful new source of business capital for the U.S. and global economy.
I'd like a private corporation to create a universal defined-benefit investment option with inflation-indexed retirement income and medical benefits, just like the plans once offered by America's largest companies. I would like everybody to be able to purchase these benefits like an immediate annuity.
I'd like the life insurance industry to get out of the business of mixing investments with risk management, and simply concentrate on pooling the very real risks of premature death (and the loss of future earnings) or extended life (and the danger of outliving your assets).
I'd like investment products to be created with the best interests of the consumer in mind, rather than creating trendy investment ideas that can be sold based on the mania of the moment.
And I'd like consumers to pay attention to whether fund companies have a track record of selling trendy products into demand - by looking not just at track records, which is a clue, but also at the disparity between the fund company's overall return and the average returns of its investors.
I'd like brokerage lobbyists and executives to tell the truth to Congress and their regulators: that their retail brokerage divisions simply could not generate the highest profits in the global economy, or make the richest bonus payments, if they were forced to put the interests of their customers first - the way that, say, doctors are expected to.
I'd like our congressional representatives, when they consider legislative action, to put the well-being of the voters ahead of their money-raising activities, and listen as closely to advocates of consumer protection as to industry lobbyists.
I'd like the cable financial programs and investment publications to recognize that the daily events of the market are nothing more than meaningless white noise. Rather, I'd like them to simply focus over and over again on the message that investors are better off identifying investments with solid, long-term track records, or capturing market returns as cheaply as possible by paying attention to costs and taxes, as well as saving and investing prudently - and ignoring 95% of the breathlessly reported daily market information they hear.
I'd like American consumers to recognize that saving and investing for the future are important adult responsibilities.
I'd like to see an end to all soft-dollar and other financial arrangements that are undisclosed to consumers yet affect how client dollars are invested. Is there any question who actually pays for these under-the-table deals?
THE UNKNOWABLE FUTURE
I'd like economists and pundits to admit that the future is unknowable, and that there are far too many variables and unpredictable events crouching unseen over the horizon for anyone to give accurate forecasts of what we should expect. If these so-called gurus aren't willing to make this clear admission, then they should be required to wear wizard hats and robes and gaze into a crystal ball when making bold market predictions.
I'd like research firms to finally recognize that financial planners and investment advisors have long since evolved away from being product "distribution channels."
I'd like the Fed to end all the QE programs, and for the markets to recognize that this is a good thing.
I'd like salespeople to take pride in their profession, and identify themselves as sales professionals, rather than pretending that they're financial planners or investment advisors.
I'd like the U.S. to follow the lead of Britain, South Africa, Australia and India, and forbid people who hold themselves out as professional advisors from receiving sales commissions based on their recommendations.
REGULATORY REALITY CHECK
I'd like the world to recognize that capitalism is different from "anything goes" - and that, rather, it means fair competition among providers of ideas and services and products, and that there have to be rules to ensure that the competition is fair.
I want the U.S. to create a system underwhich key employees of regulatory agencies be forbidden from ever taking jobs with the companies they regulate, or from working at other firms that lobby or advocate on those companies' behalf.
I'd like the financial planning/investment advisory profession to agree on a single, dominant professional credential.
I'd like the financial services industry to create a professional service organization that would be regulated at the state level - like medical boards - that would grant membership only to properly credentialed advisors who are willing to sign a fiduciary oath and provide advice on a fee basis. Let's see the SEC recognize that the "two-hat" approach is unworkable - that there are significant consumer protection issues whenever an advisor tries to function as a fiduciary and create a financial plan, only to switch hats and offer investment and insurance tips. Failing that, the SEC should require these advisors to wear clearly marked labels during client meetings that read "fiduciary" or "salesperson."
I'd like financial planning professionals everywhere to recognize their true value to clients and to the world, helping people navigate the maze of conflicting and conflicted information to achieve successful and prosperous lives.
I'd like the vital service of financial planning to become one that's routinely available to mainstream consumers.
And for all of you - those readers who sincerely mean well in your business dealings, and who work hard for the benefit of your clients - I'd like you to experience fulfilling, healthy, profitable and successful careers.
I figure it will take at least a couple of months to bring these goals to fruition, so sometime early in 2014 I can start a new list.
Bob Veres, a Financial Planning columnist in San Diego, is publisher of planning industry website Inside Information. Post comments on his columns at financial-planning.com or email them to firstname.lastname@example.org.
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