July 31, 2018
I was a registered rep for a large insurance broker-dealer for 9 years. And have been running my RIA for 4 years now. So I have had the opportunity to see both sides of the business.
The proposed Form CRS disclosure is supposed to explain the relationship between advisors and brokers, but uses confusing language that blurs (instead of highlighting) the distinction between who can and should legally give advice, versus who is compensated for the sale of a product. This is not a step in the right direction and will ultimately harm consumers.
Further, allowing hybrid broker-dealers to state that they are financial advisors without any requirement to disclose when they STOP wearing their advisor hat and switch into a sales role will also ultimately harm the customer.
The majority of consumer harm occurs when financial product salespeople operate under the guise of "trusted advisor" in an effort to accelerate production. When everybody acts as the trusted advisor, consumers have no way of identifying who is selling vs. who is providing advisory services. I've been a sales person for a major broker-dealer insurance firm and I know what it's like to be a true sales rep vs. be in the position of the trusted advisor. And when you're the "advisor" in the eyes of the consumer, it's much eaiser to sell whatever you want.
A better step would be to only allow advice-providers (those that qualify under the Investment Advisors act of 1940 as IAR's) to operate under the title of Financial Advisor/Adviser. And prohibit brokers from operating under this title.