If I Were King…

We have the royal coronation in England to remind us that once upon a time, one person would issue all the laws – which is an unfair but very effective way to make things happen. Here are the edicts that I would issue if the financial services world made me its king.

There is some precedent for this kind of thinking. Back around the turn of the century, Peggy Ruhlin, then president of the International Association for Financial Planning, and founder of Budros & Ruhlin in Columbus, OH, wrote an article entitled “Queen for a Day.” She outlined what she would do if somebody were to put a crown on her head and give her unlimited powers. It was a widely influential piece of writing, which illustrated how far we were from having a recognized profession, driving out self-interested sales and turning all the squabbling association voices into a unified chorus.

Let’s fast-forward 24 years to today. I’m graciously participating in my own coronation, which I guarantee will cost less than whatever they’re doing in London next week. What would I do with that crown on my head?

You might imagine, if you’ve noticed my unwavering support for the fiduciary standard in past articles, that I would ban commissions. But in that regard, I would surprise everybody. I would, in the benign spirit of “live and let live,” allow brokers and sales agents to continue to collect commissions from their customers.

Why? Because in my royal wisdom, I believe that enforcing a ban on commissions is virtually impossible. Australia did it, and when I talk with advisors there, they tell me that all the banks immediately put their reps on salary, and then began paying them quarterly or annual bonuses which, by a strange and unexplainable coincidence, happened to look exactly like the commissions they had been receiving before, based on recommendations which were definitely, absolutely, positively not sales.