What’s Not to “Like”? Government Gone Amok

Testimonials can be powerful marketing tools.  The recently concluded political season saw numerous t.v. ads which included statements from individuals explaining that they supported a particular candidate, why, and encouraging you to join them in their support. Most types of businesses find advertising which has an existing client endorsing the services the business provides to be effective.

Investment advisors do not use this kind of advertising, though.  Why?  Because SEC regulations prohibit investment advisors from using “testimonials” in their advertising.  Apparently a client appearing in an ad to say that they are happy with a particular advisor’s services and recommending that you might want to check them out is so unduly influential or coercive that it might compromise a viewer’s or reader’s independent judgment….?  But that is the rule and all of us in the industry live with it.

The rule itself isn’t the problem.  The problem is the extremes to which rules are taken.  In January the SEC issued a treatise entitled “Investment Adviser Use of Social Media”. In it they raise a number of important points which investment advisers need to heed as it relates to their compliance responsibilities in a social media environment.  One particular admonition really bothers me, though.  The SEC feels that if an investment adviser maintains a Facebook page and a visitor to the site clicks the “like” button on the site, that this act may be a violation of the SEC rule against testimonials!

Say what?!? Yes. You can go anywhere else on Facebook, run across something that you think is interesting and indicate that others might find it interesting by “liking” it.  But if you visit an investment adviser’s website and you read something you think others might like, “liking” the site may be a violation for the adviser that would give rise to regulatory sanctions.  That is right.  Instead of spending their resources finding people like Bernie Madoff, Allen Stanford, Peregrine Financial Group and others and preventing them from stealing funds of clients, the SEC is instead committing its resources to making sure that investment advisers aren’t improperly luring unsuspecting prospective clients into their lairs because too many people are “liking” their website on Facebook!

Don’t get me wrong.  I have great respect for and value the important role proper regulation plays in protecting the public.  It is irritating when financial services organizations complain about laws such as Glass-Steagall – which did a fairly good job of keeping us out of another depression after it was enacted in 1933 – and are effective in getting it repealed, but then promptly embark upon the kinds of activities the law prevented and lead us into the Great Recession.  Or when they are so obstructionist about a proposed law to make everyone who holds themselves out to the public as an investment adviser subscribe to the fiduciary standard to the point where either the proposal doesn’t get passed or by the time it does get passed, it will be so watered down it won’t really accomplish its original intent.  But sometimes complaints about regulatory overreaching is well-founded.  Why we can’t put our resources – resources that we are all paying for as taxpayers, by the way – into putting the safeguards of Glass-Steagall back in place to prevent another Great Recession/Depression and into clarifying for the public who is really “advising” and protecting them as a fiduciary and who is instead selling them something and cloaking the sale as “advice” instead of spending our resources making sure people are not “strong-armed” into using the services of a particular investment adviser because too many people are “liking” their Facebook page is beyond me.

I’m sorry, but this regulatory concern over Facebook “likes” is a great example of government gone amok.  Wasting our tax dollars.  If the SEC had a Facebook page and had posted this pronouncement out on that page, it would be another time that I wished that Facebook offered a “dislike” button.

About Objectively Speaking

Tom Batterman, founder of Vigil Trust & Financial Advocacy and Financial Fiduciaries, LLC is in the business of representing the best financial interests of his clients. Having provided objective, fee-only financial management services for over two decades, he specializes in managing the investment and related financial affairs of individuals and mutual insurance companies who do not have the time, interest or expertise to manage such matters on their own. As an objective, unbiased professional who takes on a fiduciary responsibility to his clients, he guides clients to the financial decisions they would make themselves if they had years of training and experience and the time and expertise to fully research and understand all of their options. Founded in 2010 as an outgrowth of Vigil Trust & Financial Advocacy, Financial Fiduciaries, LLC is a financial management solution for individuals and mutual insurance companies who recognize they do not have the time, interest or expertise to properly attend to their financial matters on their own. While there are many financial “advisors”, most of them have investment products to sell and the “advice” they provide is geared toward getting their clients to engage in a purchase. As one of the rare subset of advisors known as “fiduciary advisors”, Financial Fiduciaries does not sell any investment product so its guidance is not compromised by conflicts of interest which plague ordinary advisors. Prior to his employment in the financial industry in financial advocacy and trust positions, he worked at a private law practice in the Wausau area in the areas of estate planning, tax, retirement planning, corporate organizations and real estate. He is a graduate of the University of Wisconsin-Madison and the UW-Madison Law School and has during his career held Series 7, 24 and 65 securities licenses. A longtime resident of the Wausau, Wisconsin Area, Tom is active in the community. He enjoys golf, curling, skiing, fishing, traveling and spending time with his family.
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