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Regulation and Compliance > State Regulation

Editor's Note: Talking to the Enemy

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The silver-haired estate planning attorney slipped into the seat next to me and snarled when the speaker began to speculate about tax policy in the still-new Presidential Administration, “What did any of them expect from Obama?,” the attorney barked in reference to the likely big increases in everything from the estate tax to capital gains to income taxes “for the wealthy.” “This man,” he stage whispered, “never had a job in his life.” Forget the partisanship and the illogic. Remember the visceral reaction to raising taxes. It’s a feeling that’s not uncommon among those who pay most of the taxes in this country, who happen to be the same ones who create the most jobs, and who take the risk of starting their own companies. These are the people most likely to be your clients, of course. As I write this note there are “tea parties” taking place across the United States in which groups of disgruntled taxpayers are following the lead of the Founding Brothers and protesting the coming increase in taxes. The parties may be bankrolled mostly by Republicans, but the disaffection is real.

Being catholic in my choice of friends from both ends of the political spectrum (an anomaly in itself, I know) I am aware that President Barack Obama is both a uniter and a divider (I was taught early on in my journalism career that like a good psychotherapist, I should be aware of my own political predilections and not let those biases unduly influence my reporting or editorial work: During my years at The New York Times, I was fond of saying that when I walked into the mother ship of the Old Gray Lady on West 43d Street in New York, I felt like the most conservative guy in the world; when I returned to my rock-ribbed, lily-white Republican hometown in the New Jersey suburbs, I felt like a Bolshevik. That seemed, and seems, about the right way for a journalist to feel.)

The truth is, as we argue in our cover story this month on the seventh annual IA 25, our entirely subjective list of the most influential people in and around the investment advisory universe must include the 44th President of the United States. Partly through his personal political convictions but mostly because of the timing of his accession, Barack Obama’s decisions and use of his bully pulpit, here and abroad, will affect the lives of your clients for years to come. But I would argue that all the others on that list will influence how you practice, and probably none more than the infamous Bernie Madoff. It’s not a stretch to suggest that many of your clients will be questioning your trustworthiness more than usual, just as you are perhaps conducting more due diligence when it comes to the, I don’t know, banks you invest in or the insurance companies that you’ll recommend to clients as a good source for annuities.

If there’s one subject that gets advisors’ goats more than taxes and fraud by other “advisors,” it probably is regulation and its cousin compliance. This month, in addition to her in-person interviews of Congressman Barney Frank and Don Phillips of Morningstar–both IA 25 honorees as well–our intrepid Washington bureau chief, Melanie Waddell, snagged the SEC Chairman for a wide-ranging interview that went beyond Schapiro’s public utterances before the Congress. As with Obama, even if you think Mary Schapiro is a pawn of FINRA who’s just itching to place RIAs into a NASD stranglehold, it’s good to hear directly what your perceived enemy has to say. It might just make you think, and take action. Thanks for reading.


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