Watching Others, Watching You, Watching Out

© Can Stock Photo / Bepsimage

You know the classic Catch-22 pun: “Just because you’re paranoid doesn’t mean they aren’t after you.” Here are a few items I’ve been keeping a watchful eye on lately. As an evidence-based investment advisor, you may want to take a look at them too.

Say Hello To the SEC’s SALI

Given the usual deluge of headline-grabbing alerts, you may not have noticed this May 2nd SEC press release, introducing its SEC Action Lookup for Individuals (SALI). SALI is super easy to use, and reports on “individuals” (typically, advisors) who have SEC actions against them “against whom a court has entered a judgment or the Commission has issued an order.” For now, the database covers October 2014 through March 2018, but it’s expected to expand in both directions over time.

SALI could come in handy for your own general research or due diligence on, say, a prospective hire or anyone whose credentials seem suspect. Depending on how you feel about SALI, you may also want to share the link with your investor network. Plus, try entering your own surname and make sure nothing too surprising comes up – especially if you’ve got a common name like Smith or Jones.

Boondoggle Brigade Busted

Admittedly, I’m pretty naïve. Having worked for reputable advisors and fund managers for as long as I have, I sometimes forget that outlandish fees, conflicts of interest and unprincipled practices persist among the wider financial community.

Thankfully, there are columnists like The Wall Street Journal’s Jason Zweig to remind me. Did you catch his recent “Intelligent Investor” exposé, “The Free Trips Your Financial Advisor Takes Could Cost You”? As Zweig observes of advisors who accept free trips from others, “Wining and dining with money managers for free under tropical skies could cloud his or her judgment.”

To say the least! Personally, I can’t even imagine a universe in which any reputable financial advisor would let someone else foot the bill for an all-expense-paid “due diligence conference” held at the Ritz Carlton at Marina Del Ray or the Four Seasons in Mexico City. I love that Zweig includes direct links to these and a couple of other actual, upcoming events, to show that he’s not just making this stuff up.

GDPR … It’s Growing on Me

GD-what? It’s not your fault if you’ve not even heard of the European Union’s General Data Protection Regulation (GDPR). Set to go live May 25th, it’s a big deal in Europe, but I might not have heard of it either if I didn’t have a number of colleagues and clients based there. Even then, it only dawned on me a few weeks ago that I may need to comply with portions of it too, as described in this Forbes article.

If you are not collecting, processing or storing any personal information on anyone in the EU, you can probably remain blissfully ignorant about the details. But, I wanted to bring it to your attention anyway because I’m intrigued by its parallels to our would-be fiduciary standards. Think of the GDPR as having a similar mission, but it’s meant to protect people’s personal data instead of their financial well-being.

Both seem well worth protecting, and the GDPR seems to be authentically leading the charge on this important front. If it works as hoped for, we may have the opportunity to learn from and emulate its successes as we seek to advance universal fiduciary standards of care and improve on financial best practices around the globe.

I think I’ll hit pause for now, to keep this post short and sweet. But I hope to revisit the subject soon … so keep a watchful eye on my blog. Or subscribe below to receive these straight to your inbox.