From the Creators of the Last Crash

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You want to hear a good joke? How about this one: the guys who oversaw the last market crash want more authority to regulate the rest of the financial industry.
 
For the first time, Finra chief Richard Ketchum called for adopting fiduciary standard for all advisers. “We ought to move to a single standard, and I think it makes sense for it to be a fiduciary standard,” he said.
 
"Mr. Ketchum is chairman and chief executive of the Financial Industry Regulatory Authority Inc. of New York and Washington.
 
He and other Finra officials have called for bringing investment advisers under a self-regulatory organization in order to leverage the ability of the Securities and Exchange Commission to supervise advisory firms."
 
This is a terrible idea; Finra, to date, has been overseeing the brokerage industry and the big institutions, you know the guys that basically caused the entire economy to nearly collapse last fall!
 
Ketchum does not want to alter suitability rules that broker dealers are obliged to follow, which he claims “provides a level of specificity and value over and above a fiduciary standard.”
 
Give me a break. Suitability standards are flimsy.
 
Example: your “adviser” (read: broker) determines that you need a large cap growth fund to represent 15 percent of your overall investment portfolio allocation. He has two funds to choose from (both offered by his company). The first costs one percent a year, the second two percent annually. His bonus is tied directly to company revenue. Gee, which do you think he’ll choose? It’s a “suitable” investment for the client’s portfolio, right?