In the last week, I spent two days in Orlando, Florida at my first meeting of the Policy Advocacy Committee of the Investment Program Association, and three days in New Orleans at my first meeting of the Real Estate Investment Securities Association as a member of the Board of Directors. Since about half the members of the IPA Policy Committee are also members of the IPA Board of Directors, it was very interesting and informative to see how each group grapples with the same issues, but from different perspectives, and with slightly different action plans. While I regret the time intrusion on my work at AOG and with my family, I believe that the critical inflection point for these pressing issues (which affect our ability to help our clients) demands this time and attention. For years I have heard colleagues wax about “getting involved” in the political/regulatory process when they retire. For me that time is now. Although President Kennedy and Prime Minister Churchill used the phrase, I think the following quote has been rightfully attributed to Edmund Burke:
“the only thing necessary for the triumph of evil is for good men to do nothing”
The Department of Labor (which controls the rules on many retirement plans) and the Securities and Exchange Commission are both engaged with members of Congress on a potential revision of “The Fiduciary Standard”. This question revolves around the duty and obligations financial advisors have when recommending an investment. Registered Investment Advisors (who charge a fee based on hours or assets) must operate under the Fiduciary Standard. Brokers (who charge a commission) have a lesser duty. At AOG, we have operated under a Fiduciary Standard, even if we received a commission (for non-traded REITS, or energy drilling partnerships). Although most of the financial world draws a strong black/white contrast between advisor/broker and fee/commission, we operate as a hybrid. Some products, which are generally only available under a brokerage/commission agreement, are very helpful to portfolios, in ways that cannot be achieved by “pure” Registered Investment Advisors. Although we would prefer to operate purely as an RIA (it would be quicker, easier less specialized paperwork), we continue to put our client’s best interest first. Although we operate under a Fiduciary Standard, we don’t believe DOL and the SEC should impose a “one-size” fits all standard that could inadvertently hurt those it purports to help. Just recently, 30 Democrat House Representatives joined Republicans in this discussion.