Tuesday, May 10, 2016

Worst Misconduct Brokers Are Retail Brokers

In a recent study by the University of Chicago - Booth School of Business, the researchers found not only a pervasiveness of misconduct but developed a rating system to rank the worst misconduct brokers, who are all retail brokers (brokers who sell to the public as investment advisers).  The 30 worst are listed here.

While the U.S. Department of Labor has proposed a limited fiduciary rule, the financial services industry is is desperately trying to further limit the rule, kill the rule, or change it to continue the ability of salesmen to portray themselves as "advisors" implying fiduciary duty while providing "advice" which is conflict of interest based.

I have long maintained that fee only fiduciary advisors need to be regulated separately from the SEC and FINRA (I personally would prefer the Consumer Finance Protection Bureau regulate SEC and State licensed fee only investment advisors to separate them from the continual and purposely wolves in sheep's clothing of those who sell or act with conflicts of interest).

Even less appreciated is my belief that current educational requirements are totally inadequate and that no professional designation provides sufficient educational requirements.  Even the so-called Masters Programs in Financial Planning are merely CFP course material, which lack academic rigor, primarily designed to provide revenue to the universities which offer them.  I have indicated verbally and in letters that fee only fiduciary advisors should have a Masters in Finance.  It would have to be at least a two year program which covered macroeconomics, CFA material, CMT material, current research on investment allocation and portfolio construction, ethics and law, and retirement planning and distribution.  This does not make me professionally popular.

I intend to write more about Fiduciary Duty and the financial services industry's desire to continue some form of public deception (confusion), but I will want to create Goggle Doc containing the research. 

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