Dodd Reform Bill POV: Dr. Lewis Altfest, CEO of Altfest Personal Wealth Management

I’m a bit wary of the new Consumer Protection Division within the Federal Reserve. It’s set up to guard against abusive practices in areas like the mortgage industry or the credit card industry. It might be a good thing, but then again it’s not their prime area of expertise.

However, I absolutely believe in the new council on systemic risk. All these claims about not being able to see bubbles are not to be believed. Former Fed Chairmen William Machesney Martin and Paul Volcker saw bubbles forming. Machesney Martin made the famous quip about the Federal Reserve and the punchbowl. It’s the Fed’s job to take the punchbowl away just as the party gets interesting. Then no one gets drunk and hurts themselves or others. And that’s exactly what loosening and tightening credit is all about; knowing when to take the punchbowl away. I’ve been through many cycles and we’re all supposed to be big boys and let the free market happen. But if we had a more activist Federal Reserve in 2005, we certainly wouldn’t be in the position we were in today.

Ultimately, I feel the independent advisor will not be significantly affected on a granular, day-to-day basis. We will be affected on a macro level like everyone else, but not on a micro level were it has a significant impact on our business operations. However, the wirehouse advisor is a different story. Unlike many of them, we’re not about selling the “hot, new thing.” In fact, we’re about doing the exact opposite. When it blows up is when we decide to buy. We have clients in certain mortgage-backed securities that have done quite well for them. We make money when the market goes up or down. But this crazy ride we’ve been on is just not worth it. I know both my clients and myself would have greater piece of mind if volatility like this didn’t occur. Hopefully, this bill will help ensure it doesn’t happen.

Dr. Lewis Altfest is CEO and CIO of Altfest Personal Wealth Management in New York.