Financial Reform: The "F" Word

Elaine Morgillo regularly contributes a personal finance column to our Sunday paper. Today she suggests that financial reform should extend beyond banks too big to fail and gamblers using financially-engineered products.

For years, the regulation of financial advice and financial advisers has been widely criticized, both from within and outside the industry. Numerous studies have concluded individual investors are confused about the differences between financial advisers. Many financial advisers, myself included, continue to be frustrated by the inconsistencies, gaps and contradictions in our regulatory environment. 

It continues to astound me that so little regulation currently exists to impose a set of standard qualifications or rules for everyone who provides financial or investment advice to consumers. Certain types of advisers are held to the highest fiduciary standards (the "f" word that many in my industry attempt to avoid) when providing advice to clients. The heart of the fiduciary concept is to always place the interests of the client above all others. This precept should be embraced by and required of all of us, but it isn't.

Efforts to impose a fiduciary standard on investing's sell side have experienced rough going. Could better labeling ("I'm a sales agent, she's an adviser") work better? Maybe not. What would you call those who offer advice for a fee but also act as investment brokers – and maybe sell insurance on the side?

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