Take 5: Tom Giachetti brings humor, insight to regulatory guidance

The regulatory attorney and chairman of the Securities Practice Group gave a typically candid speech about SEC exams at the Raymond James Wealth Managers Conference

Oct 3, 2017 @ 12:09 pm

By Jeff Benjamin

+ Zoom

If in some alternate universe there were ever a comedy club for financial regulatory wonks, Tom Giachetti could headline the show seven nights a week.

Most of his presentations, of which there are many, begin with him warning the audience that his language can get "salty," which is followed in perfect tempo with the confession that if you are offended by his language, "I don't give a [bleep]."

The seasoned regulatory attorney, author and candid commentator, is chairman of the Securities Practice Group, which he says is dedicated first and foremost to helping financial advisers get through an exam by the Securities and Exchange Commission.

"I care about one thing, and that's getting you through an exam; the rest of it is crap," he told an audience of advisers Monday in Boca Raton, Fla., where he was speaking as part of the Raymond James Wealth Managers Conference.

(More: SEC Chairman Jay Clayton doesn't intend to pursue third-party RIA exams.)

While there are mountains of lawyers working to help guide financial advisers through the increasingly complex regulatory framework, few do it with the expressive and public frankness of Mr. Giachetti. Pulling punches is never an option, especially when his target is a regulatory body.

In addition to warning audiences about his salty language, he also invites any regulators in attendance to have a seat up front, "because you might learn something." He has no patience for industry jargon, especially when it comes to communicating with clients.

"There's no such thing as assets under advisement, so get rid of that term," he said. On back-tested performance, he said, "Stop using these sexy stupid things. Just talk to your clients."

We caught up with Mr. Giachetti as he was fresh off the stage in Boca and hankering for a bourbon.

InvestmentNews: Why do you think the SEC so aggressively pursues registered investment advisers?

Tom Giachetti: Because they don't value the expertise that an investment adviser brings to his clients. They look at robo-advisers and Vanguard, and don't understand why an investment adviser charges a multiple of that to provide advisory services.

What they don't appreciate is, what an investment adviser does. He or she sells discipline; making sure clients don't make stupid mistakes.

It is a disgrace that the SEC is looking at portfolios and turnover and making a determination based upon that, that an adviser is not fulfilling his or her obligation, and/or are worth his or her advisory fee.

That is not the purview of the government.

IN: What is the best way to get through an SEC audit?

TG: Hire me. (He chuckles) It's true. Go through an exam. Make sure you understand how to answer every single question. Then hire me.

IN: What is the biggest mistake an adviser can make regarding SEC oversight.

TG: They didn't hire me. (More chuckles) No, no, no. I'm kidding. The biggest mistake would be drinking the Kool-Aid. By that I mean, thinking that the SEC is only concerned about Johnny and Suzie's transactions, and best execution, and not understanding the issues that they're looking at. They are getting into the weeds, because they don't want to leave your office unless they can find some way for you to write a check to somebody.

IN: What are the best and worst parts of the Department of Labor's fiduciary rule?

TG: The best part is it's been postponed to July 2019. The worst part is, the knuckleheads who devised it, who have no clue about the industries that they're regulating.

(More: DOL fiduciary rule: Challenges for RIAs under the BICE.)

IN: What's wrong with financial advisers using social media as a marketing strategy?

TG: Well, nothing except what's crazy to me is that firms will hire marketing consultants, most of whom haven't got a clue about the business. And they will spend an exorbitant amount of money on a marketing campaign, but they won't spend an hour to pay me to review the proposed material to make sure that they can actually use this stuff. They are being guided by marketing consultants thinking that social media is the be all and end all. I promise you, that if you add up all the people who actually look for an investment adviser on Facebook, they'd have a $1.98 to their name.


What do you think?

View comments

Recommended for you

Sponsored financial news

Upcoming Event

Apr 30


Retirement Income Summit

Join InvestmentNews at the 12th annual Retirement Income Summit - the industry's premier retirement planning conference.Much has changed - and much remains to be learned. Attend and discuss how the future is full of opportunity for ... Learn more

Featured video


What to do when your partnership ends

Breaking up is hard to do: and that is certainly true when it comes to advisory firms. Financial Adviser Rob Holdford tells his story and explains how you can survive and thrive when a partnership dissolves.

Video Spotlight

The Search for Income

Sponsored by PGIM Investments

Recommended Video

Path to growth

Latest news & opinion

E*Trade acquiring custodian Trust Company of America

Discount broker buying second-tier custodian for $275 million.

Another thousand Dow points higher, and investors yawn

Market milestones keep falling like dominoes, with 51 records broken so far this year.

LPL retains $570 million with super-OSJ deal

Kansas-based nVision Wealth will come under supervision of Chicago-based IHT Wealth Management.

How does your advisory firm stack up?

Comparing a firm's pay to the competition can point out vast flaws.

10 signs your client is cheating on you

Sure signs that clients may be on the way out the door.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print