If we needed any more proof of the power of the language, I present as Exhibit A the townhall meetings on healthcare reform. Full of sound and fury, these meetings are being used by both sides in the debate to push their own agendas. The New York Times reported on August 16 that the "debate" has turned into a "full-blown national political campaign replete with battleground states, polling, leafleting, and fractious town hall-style meetings."
The student of history in me would point out that American political history is rife with episodes of such over-the-top arguments and threats of violence. Our greatest Presidents were on the receiving end of plenty of insults in their days at least equal to the "Obama-is-a-communist-trying-to-bring-down-our-way-of-life-and-ruin-our-economy" charges. What is of more interest, however, is how each side is using phrases in the debate--like the "death panels" that ostensibly will decide whether a sick person will provide sufficient economic benefit to society to justify further medical treatment--that provoke visceral responses that then preclude further rational debate on the merits or failings of the Administration's proposals.
That's why it was so refreshing to sit down with the leaders of this year's winning Broker/Dealers of the Year and to hear them calmly discuss how regulatory reform will affect their businesses. They all agreed that while having a fiduciary obligation imposed on them was a concern, it was also a red herring. "In arbitration, we're already held to a fiduciary standard," noted Jerry Rydell, CEO of Sigma Financial, which is Broker/Dealer of the Year in Division III. David Stringer of Division I winner Prospera Financial said "we all tell our advisors, and look for advisors, who are putting their clients' interests first, so for the most part that's already taking place."
"We'll find our way through the fiduciary issue, though that will take a lot of give and take," admitted Brian Murphy of Woodbury Financial, Division IV winner. "But, if they all of a sudden reclassify our independent contractors as employees, it hurts our entire system." Ralph DeVito, president and CEO of Division II winner The Investment Center, put the repercussions of such a move starkly: "Then we're out of business, and we turn into a wirehouse."
It's the law of unintended consequences in reform that concerns them. "The overall reactionary approach is not going to be good for regulation," says Murphy. Stringer agrees, reporting that "what scares me is...this need for speed, without the proper amount of time in which to comment."
Perhaps all of us need to foster reasoned debate on these important issues, and encourage those groups to which we belong, and those who represent us and regulate us, to follow suit.
Speaking of words, Dan Barry, director of government relations for the Financial Planning Association, asked us to clarify our reporting in the August issue on the FPA's position on the Consumer Financial Protection Agency. Barry writes that FPA "hasn't taken a position on CFPA, or the Adminstration's proposals more broadly (other than a fiduciary duty for brokers providing investment advice)." Barry says FPA does support the "broad goals of the proposal" (italics his), but not the proposal itself, on which, he says, "we have no position."