Wednesday, May 19, 2010

Where Art Thou Fiduciary Duty to Clients?

I had an industry email flash come across my screen saying that the Senate Bill on Financial Reform is expected to pass tomorrow. Then, later I heard that the Democrats are in last minute meetings trying to secure the 60 votes needed for cloture. This prompted me to go view the latest version of the bill, Senate Bill 3127 with amendments.

We have heard within the last week that the fiduciary standard of care would be applied to broker/dealers with an exception for Variable Annuities. Looks like the insurance companies were able to get fiduciary duty exempted from their activities, because Variable Annuities are only sold by insurance agents who also have securities licenses. So, it is with great anticipation that I went to the Senate Banking Committee's web site to find the latest version of the bill.

I pulled up the latest version of S. 3127, then I did a search for the word fiduciary. Guess what? There is no mention of the word fiduciary in regards to consumer protection. I am not kidding. I am dead serious.

I guess since the insurance lobby won out on the Variable Annuity issue, then it must have ticked off the lobbyists for the Banks and Broker/Dealers. I'm sure they complained that the Insurance Company lobbyists should not be exempted from the fiduciary duty to consumers while they were subject to it. The Bankers and Wall Street lobbyists, it appears to me, have managed to get rid of the fiduciary duty to consumers  altogether. Banks, Insurance Companies,Wall Street firms and their lobbyists have once again destroyed any chance of getting fiduciary duty protections for consumers, in my humble opinion.

Of course, this is no surprise to me. As I have blogged about over and over again, it is impossible to have a fiduciary duty to clients if you have a revenue quota at your Bank, Insurance Company or Wall Street firm. If these firms had to live by a fiduciary duty to consumers, then they would not be able to require their representatives and agents to meet their revenue quotas. As always folks, it is all about the money.

As long as consumers keep trusting, or excuse me, allowing Banks, Insurance Companies and Wall Street firms to take their money, then they can all count on plenty of lobbying funds for Congress. Let's face the facts. Once this bill passes, it is extremely doubtful that we will see any other massive piece of legislation that will include protections for consumers. As always, Banks, Insurance Companies and Wall Street firms win and the consumer loses. If you do not believe me, look at the credit card reform legislation. Did it help consumers? No. It only helped the credit card companies.

Consumers can win if they make one minor change. Quit doing business with anyone affiliated with a Bank, Insurance Company or Broker/Dealer. Instead only do business with Independent Registered Investment Advisers like me. Independent means no affiliation with any Bank, Insurance Company or Broker/Dealer. None. Nobody. No one. Not a single soul. Not any. Not a single person. Not one iota.

Never again fall victim to the shenanigans of Wall Street. Hey, that sentence is on the cover of my book, Keep Your Assets. Take My Advice. Have you read my book yet? You can find a link to Amazon or Barnes and Noble at the top of this blog page, right under the picture of my book. Thank you very much.