I’m not much of a rabble-rouser on the political front. I’d usually rather bury my nose in a good book. But after reading a couple of articles in today’s RIA-Biz, I got my dander up enough to act on NAPFA’s new chairman Ron Rhoades’ call to action that we write our congressional representatives about the upcoming vote on the Bachus Bill, Investment Adviser Oversight Act of 2012.
I started typing and, the next thing I knew, I had sent the following letter to my Congressional Representative Peter DeFazio. I thought I’d share it with you too, in case it inspires you to do something similar. Feel free to borrow from my own content, or Ron Rhoades also provides letter templates in his article. But act fast if you do. Time is fleeting.
Strike Down Bachus Bill, Investment Adviser Oversight Act of 2012
I understand that on June 6, the U.S. House of Representatives is scheduled to hold a hearing on Rep. Bachus’ bill, The Investment Adviser Oversight Act of 2012. I am alarmed by the proposed legislation and urge you to vote in opposition to it.
To summarize my concerns, I just finished reading two, opposing-viewpoint articles on the subject, one by Financial Services Institute Chairman Joe Russo and the other by incoming NAPFA Chairman Ron Rhoades.
Acknowledging this is a very complex issue, I believe as our representative, your decision about it does not have to be so complex. Not if you focus on “the ball,” which is ensuring that anyone who provides investment advice does so strictly in the investor’s best interest.
After all, what good is any other kind advice? This Act not only does not help accomplish that goal, in my opinion, it has quite the opposite effect – dangerously so. Russo’s and Rhoades’ comments say it all in terms of explaining why that is so.
FSI’s Russo, who is reluctantly supporting the Act, commented: “We’re here to create a healthier, more business-friendly regulatory environment for you, our members. We’re here to make your life easier and your business more prosperous, and to preserve your clients’ access to your much-needed services — period.”
In contrast, here’s what NAFPA’s Ron Rhoades had to say about our financial industry (and why FINRA’s interests in becoming its regulator according to this Act would be diametrically opposed to individual investors’ well-being):
“More and more with each passing year, stockbrokers (registered representatives of broker-dealer firms) [have] left the product sales mentality of Wall Street for the small businesses and small professional firms of independent registered invest advisors. Why? Because they want to be able to act in the best interests of their clients at all times, to care for their clients, and to possess the tremendous satisfaction flowing from assisting others in a true fiduciary-client relationship.”
Compare and contrast these two calls to action, and it should become a no-brainer decision. Advisors are leaving the FINRA-regulated world because even they don’t like what they’re seeing taking place there in pursuit of our “Muppet” money. Note in particular Russo’s priorities: Making financial professionals’ lives easier (fine, but why should that be a regulator’s top priority?); helping them make more money (guess from whom?) and making sure they continue to have a revenue stream (from investors who might otherwise have the audacity to shop around).
Where, oh where is a whisper of commitment to or concern from Russo over what’s right for me and other everyday investors? How will Russo & FINRA Friends’ flavor of “oversight” help hard-working American investors who deserve to be told the whole truth and nothing but the truth by anyone offering them investment advice?
I’m generally an upbeat, positive-thinking person. So I wish I could proactively endorse an alternative Act that is aligned with protecting rather than weakening advisor oversight and investors’ highest financial interests. Unfortunately, I’m not aware that such legislation currently exists. I’m certainly available to bounce ideas off of if you’re thinking through what to do on that front. In the meantime, I encourage you to pass on this grounder by voting against it. Let’s wait for another, much better pitch.
Wendy J. Cook