From the November 2013 issue of Investment Advisor • Subscribe!

How to Cheat Widows and Orphans

The audience sat in rapt silence as Jessica recounted her plight for a client panel at a recent event in Florida. Her husband was a Navy pilot killed in the line of duty in Afghanistan. She received the news as a mother of a two-year-old while nine months pregnant with their second child.

“I was handed a pretty sizable check within two and a half days of hearing the news,” she said. “I was a deer in the headlights. I was numb and had no idea what to do. It was all a blur. I had to make these decisions that could affect the rest of our lives.”

Her brother recommended a professional he was using, a former Army soldier that Jessica felt she could trust because “he would understand the situation and the benefits I would receive.”

“I have to focus on being a mother and the well-being of other people,” she noted. “I had to turn it over to him and say, ‘Here, you deal with this. Please don’t mess it up.’”

When asked by the panel host if her financial professional was a broker or investment advisor, Jessica said, “I think he’s an investment advisor, but I’m not certain.”

I eagerly clicked on a recent article in The Wall Street Journal titled “Adviser Movement Picks Up Steam,” anticipating what I thought would be a report on the number of breakaway brokers moving to the independent channel to become full-fledged advisors.

“In the past few weeks, broker movement between large firms has been increasing,” the article read. Well, which is it: broker or advisor?

It was the former, of course, and the article detailed traffic between Merrill Lynch, Morgan Stanley, Wells Fargo and UBS. Wells Fargo Financial Advisors played in as well, further muddying an already viscous definition. I’ve been in this business for going on 20 years. If I’m befuddled, what chance do … well, you know the rest.

Think the Merrill Rule is in the distant past? Think again. It might have been officially defeated, but the confusion it was meant to cause lives on, and it’s one big source of industry shame.

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