Call for Action to Investors!!

The market news from Wall Street has been positive for a change. But like me, are you wondering if Congress is ever going to change the way Wall Street takes risks with your money?

Right now Congress is looking at the big problems associated with the AIG and credit default problems, but sometime in the near future they will be looking at how to reform the way Wall Street brokers give you financial advice.

To those listeners out there who are still upset with Wall Street misconduct, in a minute I’m going to explain how you can do something about it.

By way of background, the whole advisor area needs serious reform. Years ago your parents clearly knew who was a stockbroker and insurance agent, because that’s what they called themselves. Pretty simple.

The problem is they no longer call themselves brokers or insurance agents. Today the preferred titles are financial advisor, financial consultant, wealth adviser, retirement specialist – the list goes on and on. In reality, brokers and insurance agents are still regulated as sales people and the bottom line is they still need to meet sales quotas to stay in business. This is hugely different from licensed professionals like doctors and lawyers, who are required to act in your best interest. Many in the listening audience may be aware that I am a registered investment adviser, which is different from the brokerage side of the business. Investment advisers, like doctors and attorneys, are required to legally act in your best interest, not meet production numbers.

I believe that if someone talks the talk, they should walk the walk. In other words, if someone markets themselves as a trusted advisor, they should be required to act in your best interest and to disclose conflicts of interest. Some of the conflicts that need to be pro-actively disclosed but are either posted somewhere on a regulatory website or not at all are sales bonuses or payment incentives that might lead a salesperson to recommend a product that benefits them or their firm more than you. Even worse, if they’ve been in trouble with the law before or sued for bad investment advice, current law doesn’t require them to disclose it to you upfront. Investment advisers are required to disclose all of these things.

So here’s what you can do. Grab a pen and write this down. If you know of the name of your members of Congress – including your two senators, there are two easy way to contact them. Call the Capitol Hill Switchboard in Washington, D.C. at 202-224-3121, that’s 202-224-3121, and they will be happy to connect you to either your house or senate member. Just be prepared to leave a short message, since odds are your senator or representative is busy.

If you don’t know your congressperson’s name, or you want to contact them by email, just go to www.congress.org, enter your home address and zip code in the appropriate box and you will find a list and links to your congressperson and senators where you can contact them directly with your own message.

The message is pretty simple. Tell them that a) you are an investor and voter, b) that you are upset with Wall Street greed, and c) the public needs congress to come up with common-sense regulation of all financial advisors. Tell them that no matter if the adviser is regulated under insurance, banking, or brokerage laws, if they are giving investment and retirement advice to the public, they should be subject to a fiduciary standard that requires them to put your interest first. You deserve no less than that.

For more info on the differences between advisors, click on my article here.