Even without funding, SEC must do its job Indulgence is the enemy of industry for heirs

Jul 20, 2014 @ 12:01 am

After reading the “Lack of adviser oversight is ticking bomb” editorial (InvestmentNews, June 30), I commend IN for the following:

“Despite the relatively meager increase in funding for fiscal 2015, the SEC must not use a lack of financial resources as an excuse for letting investment adviser oversight fall by the wayside. Like companies and individuals must do in times of belt tightening, the commission must find a way to fulfill its mandate of protecting investors from unscrupulous advisers and planners.”

The SEC can and should do more with the resources it has. The SEC's budget in 1997 was about $300 million. For 2014, it is $1.4 billion (an increase of more than 450%).

During the same period, the total number of SEC-registered investment advisers has grown from about 7,000 to about 11,000 (an increase of about 55%).  While I certainly appreciate the expansion of the agency's responsibilities during this time, it's reasonable to question why the agency has failed to take action sooner to address the relatively low frequency of [investment adviser] examinations.   

As my recent letter to [SEC Commissioner Daniel] Gallagher indicates, one potential solution — that does not require any legislation or rule making — is for the SEC simply to reallocate its resources.

For example, the SEC has more than 300 full-time examiners who are dedicated to broker-dealer oversight — in addition to [the Financial Industry Regulatory Authority Inc.]. Why not take some of those folks and assign them to IA exams?

David G. Tittsworth

President and CEO

Investment Adviser Association

I had to respond to Liz Skinner's article “Sting and other wealthy celebrities don't want money to ruin their kids” (InvestmentNews, June 23) from the perspective of an adult child.

I am a financial planner and I tell this story to many of my clients, as well as to their children.

When I was 19, most of my dad's peers were buying cars for their teenager, so I asked Dad when he was going to buy me a car. He looked at me and calmly said, ”Just because I earn the money doesn't mean you get to spend it.”

I can tell you that I probably told him I hated him, accused him of not loving me, and called him cheap and selfish. But as the years went by, I came to appreciate what he had said.    

That lesson was reinforced again when it was time to attend college. I started college at the University of Michigan. My dad got a job in Florida my sophomore year and told me I was going to go to school in Florida because that was where he paid taxes. U of M being a top school, I said I was going back there.

I saved my money during the summer and had plans to leave on my own (never to return) until dad finally said I could go back to Michigan, but on my own. That was the best “stubborn choice” I probably ever made. This is another story that I share with clients.

Because I truly credit lessons such as those for my financial success today, when I have a client who has accumulated more than $1 million, I generally find that most of them had a similar “parental money experience.”

I learned to never expect life to be handed to me on a silver platter, and am proud to be able to say I have truly earned my way ever since I was 19. My only regret is that Dad did not live long enough to see me truly appreciate the lessons I learned from him. 

Ilene Davis

Financial consultant

Financial Independence Services

Cocoa Beach, Fla.


What do you think?

View comments

Recommended for you

Featured video


Vanguard's Joe Davis: Prepare for lower expected returns

The next five years will be more challenging for the markets than the past five, according to Joe Davis, global chief economist at Vanguard. Here's why it's more important than ever to stay reasonable with return expectations and stick to the plan.

Video Spotlight

Are Your Clients Prepared For Market Downturns?

Sponsored by Prudential

Recommended Video

Path to growth

Latest news & opinion

Jerry Schlichter's fee lawsuits have left an indelible mark on the 401(k) industry

After a decade of litigation, fees are lower and retirement plans are more transparent. But have the lawsuits gone too far?

10 best financial adviser jokes

How many financial advisers does it take to screw in a lightbulb?

With margins crashing, broker-dealers look to merge: report

Increased regulation is straining profit margins among broker-dealers, sending many of them into the arms of their bigger brethren.

Hackers may have profited from SEC breach

The hack of the agency's Edgar filing system occurred in 2016, but the regulator didn't conclude until last month that the cybercriminals may have used their bounty to make illicit trades.

Top 10 financial firms ranked by investor satisfaction

Find out which firm took the top slot for overall investor satisfaction for the second year in a row.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print