A sample text widget

Etiam pulvinar consectetur dolor sed malesuada. Ut convallis euismod dolor nec pretium. Nunc ut tristique massa.

Nam sodales mi vitae dolor ullamcorper et vulputate enim accumsan. Morbi orci magna, tincidunt vitae molestie nec, molestie at mi. Nulla nulla lorem, suscipit in posuere in, interdum non magna.

The Best Financial Regulation: Being True to Yourself

Lovaii Navlakhi CFP IndiaBy Lovaii Navlakhi, CFP

My English class teacher in Standard 9 taught our entire class a lesson in integrity which I still haven’t forgotten to this day. He walked into class one day and announced that he knew 2 students had cheated in the prelims exam and that he was giving them one week to own up. In either case, he would fail them in the paper; but if they were honest, they would be promoted to Standard 10.

The fact that he was the Principal of the school galvanized my classmates into action.

Nearly two thirds of the class of 135 specified the paper(s) they had cheated in, and dropped their names in the “confession” box outside his office. That one incident over 35 years ago changed my life forever: and it taught me more than anyone has ever taught me in life. The next year, we had all our exams without a supervisor, and none of us cheated.

So, every time there is a song and dance about regulation and how it affects financial advisors, I put my ear muffs on and ignore the distractions. Not because I do not want to follow the rules, but because the rules do not change the game we are playing. Our game is not the 100 metre sprint, but the marathon. What happens in the short run, frankly, is unimportant.

Protecting Investors Interests: Isn’t That What We Want?

Financial advisors have a role to play in ensuring that the regulation continues to be progressive and consistent. We do not like sudden swings and shock treatment is required when things get too far out of hand. The stark reality is actually that the regulator is always on the side of the “true” financial advisor. This is because the regulator needs to ensure that the investor’s interest is protected. Isn’t that what, we advisors, want after all?

What I want is greater regulation – does that sound contradictory? Before you stop listening, let me add that the regulation I want more of is self-regulation. Regulation must ensure that we, as advisors, are honest, even if it is at the cost of losing business. It must also ensure that we are transparent, even if it is at the cost of losing business. Regulation or no regulation, we must be willing to own up to errors. We cannot be right always (as we more than aptly know); and we must not imagine that we are invincible, even if it is at the cost of losing business.

The only way to ensure this is to be true to ourselves, especially when no one else is looking. I do not constantly look over my shoulder to see if my fellow advisor is following the rules of the game – if he isn’t, he’s probably playing another game: and that means that head-to-head, I cannot lose!

Regulation Change Makes No Difference To Me

Let us create a “level playing field” for our clients and ensure that they get nothing but the best. Let us guarantee that we continuously increase our knowledge. And, of course, let us ensure that we share our knowledge with our clients.

It is my experience that an educated client is more informed and as a result, appreciates our efforts even more. Frankly, I do not know how regulation will help us get there. As you may have realized by now, whether or not the regulator steps in, makes no difference to my way of being…nor should it to yours.

8 comments to The Best Financial Regulation: Being True to Yourself

  • Ravi

    Excellent!! Could not have nailed it better.
    It is like stopping at a red signal whether it is
    12 pm or 2 am, whether there is a policeman
    around or not. If we regulate ourselves , it makes the
    regulators job simpler .

  • Henri

    Excellent article, I agree 100%

  • Self regulation is need for all. But how many are ready to put regulation themself? That is the point to be asked too rt??

  • You have explained a point so very simply. It is is longer run that matters. As they say one might win a battle but he truly wins who has won the war.

  • The most important point is how many of the Advisors self regulate? As part of the CFP charter or as even as part of ‘morality calling’ one would expect Advisors to act with no conflict of interest. Advisors need not be right all the time – that is understandable – but a significant number of them (Not ALL) act for furthering their own interest. This can perhaps be addressed to some extent by a formal regulation which can act as a deterrent. But as we all know we as a nation are never short of rules – we just fall short in implememting them!

  • Lovaii

    @Basavaraj and @justgrowmymoney — let’s start with being true to ourselves. Then, let’s influence whom we can to be true. Next, this circle will influence a few others. Let the chain grow, the circle grow. If we are going to be idealistic and true, ONLY WHEN all others are…. How does that make us feel?

  • wonderful message to investment advisors. i am sure it will be effective in the sense that it will register no doubt in the minds of all who have read it.

  • Tobias

    Very much to the point!

Leave a Reply

You can use these HTML tags

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>