Weather often ends up a top story during the winter if you live in Western New York. To defend yourself against the wind whipped snow, you have to know which radio station offers the best traffic and weather updates.
That station generally tends to also be the area's AM talk radio station. Traveling during the day (and after the morning rush hour), that station pops up when I start the car. If the weather isn't a concern, I usually snap the button to the nearest pre-programed Classic Rock FM station.
But in that moment between turning the key and flipping the station, I get a few snippets of either a) the news, which I tend to listen to; or b) the current talk show, which I tend to switch away from. Every once in a while, the voice on the radio is that of Glenn Beck. If he's been in the news for some reason, I'll succumb and listen for a while. While I generally don't like media personalities, I figure, most of them are like broken clocks – they're right twice a day.
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I will admit, once – and only once – I watched the Glen Beck show on Fox. I even left work early to do so. My congressman had just mysteriously resigned and Beck gave him the entire hour to explain the circumstances. Beck pressed him to say something of substance, but, like Frankie "Five Angels" Pentangeli at the Congressional Hearings in "Godfather II," the disgraced congressman changed his story. At the end of the show, Beck apologized to the audience, admitting he had just wasted an hour of their time. Beck was right that time.
What irks me, though, is his advertisement for gold. He's wrong this time.
Before we get to the fiduciary angle, let's talk about the journalistic angle. Imagine a company that buys a newspaper advertisement and proceeds to create an ad that exactly mimics the layout of the newspaper. It would confuse readers. Where does the news stop and the ad begin? To overcome this problem, papers (honest ones, at least) don't allow advertisers to copy the format. They also require any ad that might seem like editorial content to also have the word "Advertisement" clearly written above it. Beck's gold ad crosses the demarcation line and presents the ad as a news story.
I don't remember if he offers a disclaimer at the beginning of the ad saying it is an advertisement, but I'm pretty sure he states a disclaimer saying he is not offering investment advice. In fact, I think he spends a fair amount of time saying this idea isn't for everyone.
But, and here's where we need to start thinking fiduciary standard, he spends about five times more than his investment disclaimer selling the listener on the advantages of gold based on the scenarios his news reports are painting. It is a classic sales pitch – one every student of selling should learn – but it's not clear whether Beck is reporting the news or selling a product. The environment remains murky even when Beck rattles off the name and telephone number he asks listeners to call to buy gold.
Now let's consider one of the suggested "compromises" regarding the fiduciary standard – disclosure. We all know brokers sell. They're currently allowed to offer advice. But how does the average investor know when the broker crosses the line in the sand between selling and advising? How do we know when Glenn Beck crosses the line between reporting a news story on gold and selling gold? Some advocate we can resolve this with disclosure, but academic studies show disclosure doesn't work. It's become increasing hard to imagine any "compromise" would meet the objective of the fiduciary standard. Perhaps the time has come for the end of dual registration. Financial professionals need to decide whether they want to be salesmen (brokers) or fiduciaries (advisers). Never the twain shall meet.
Just as there will always be times when drivers need to listen to weather reports, there will always be times when investors need help completing a transaction. That's where brokers come in. When investors need advice, though, they need to know it's time to change stations.
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Christopher Carosa
Chris Carosa has been writing a weekly article and monthly column for BenefitsPRO online and BenefitsPRO Magazine since 2011 and is a nationally recognized award-winning writer, researcher and speaker. He’s written seven books, including From Cradle to Retire: The Child IRA; Hey! What’s My Number? – How to Increase the Odds You Will Retire in Comfort; A Pizza The Action: Everything I Ever Learned About Business I Learned By Working in a Pizza Stand at the Erie County Fair; and the widely acclaimed 401(k) Fiduciary Solutions. Carosa is also Chief Contributing Editor of the authoritative trade journal FiduciaryNews.com and publisher of the Mendon-Honeoye Falls-Lima Sentinel, a weekly community newspaper he founded in 1989. Currently serving as President of the National Society of Newspaper Columnists and with more than 1,000 articles published in various publications, he appears regularly in the national media. A “parallel” entrepreneur, he actively runs a handful of businesses, including a small boutique investment adviser, providing hands-on experience for his writing. A trained astrophysicist, he also holds an MBA and has been designated a Certified Trust and Financial Advisor. Share your thoughts and story ideas with him through Facebook (https://www.facebook.com/christophercarosa/)and Twitter (https://twitter.com/ChrisCarosa).
