{"id":3131,"date":"2012-07-11T10:38:02","date_gmt":"2012-07-11T17:38:02","guid":{"rendered":"http:\/\/canary.kcprod.info/blog\/?p=3131"},"modified":"2022-01-11T17:12:45","modified_gmt":"2022-01-12T01:12:45","slug":"wall-street-broker-ethics","status":"publish","type":"post","link":"https:\/\/canary.kcprod.info/blog\/wall-street-broker-ethics\/","title":{"rendered":"Wall Street Ethics: The Vanguard Test"},"content":{"rendered":"<p>Last week, Susanne Craig and Jessica Silver-Greenberg of <em>The New York Times <\/em>wrote a <a title=\"NY Times on JP Morgan practices\" href=\"http:\/\/dealbook.nytimes.com\/2012\/07\/02\/ex-brokers-say-jpmorgan-favored-selling-banks-own-funds-over-others\/\" target=\"_blank\" rel=\"noopener\">smoking-gun story<\/a> about the lack of ethics at JPMorgan Chase.<\/p>\n<p>\u201c[As JPMorgan Chase] became one of the nation\u2019s largest mutual fund managers, some current and former brokers say it emphasized its sales over clients\u2019 needs,\u201d wrote the duo.<\/p>\n<p>This is a surprise to people?<\/p>\n<p><a href=\"https:\/\/canary.kcprod.info/blog\/wp-content\/uploads\/2012\/07\/smokinggun1.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignleft size-medium wp-image-3134\" title=\"smokinggun\" src=\"https:\/\/canary.kcprod.info/blog\/wp-content\/uploads\/2012\/07\/smokinggun1-300x207.jpg\" alt=\"\" width=\"300\" height=\"207\" \/><\/a>For decades, the traditional investment business, aka \u201cWall Street,\u201d has thrived on a hard-core sales culture, with a legal and ethical credo that amounts to buyer beware. Of course, it\u2019s hard for buyers to beware in such a <a title=\"Upfront Blog on investment disclosures\" href=\"https:\/\/canary.kcprod.info/blog\/call-bullshit-disclosures-dont-work\/\" target=\"_blank\" rel=\"noopener\">complicated business with so little transparency<\/a>.<\/p>\n<p>Every few years, journalists and regulators rediscover the problem with Wall Street. In a follow up story to the JPMorgan piece, <a title=\"NY Times on Wall Street ethics\" href=\"http:\/\/www.nytimes.com\/2012\/07\/07\/your-money\/beware-of-fancy-financial-adviser-titles.html?_r=3&amp;src=me&amp;ref=general\" target=\"_blank\" rel=\"noopener\">A Fancy Financial Title Does Not Ensure High Standards<\/a>, Tara Siegel Barnard wrote about the latest efforts in Washington, D.C., to require Wall Street brokers to act in their clients\u2019 best interests.<\/p>\n<p>\u201cTwo years ago,\u201d she wrote, \u201cthe Dodd-Frank financial overhaul law gave the Securities and Exchange Commission the authority to write rules that would require brokers to adhere to the same standard as advisers \u2014 a standard known as \u2018fiduciary duty\u2019 \u2014 but the law stopped short of requiring that the rules be written. Not surprisingly, the S.E.C. has yet to write <a title=\"NY Times on historic SEC regulation changes\" href=\"http:\/\/www.nytimes.com\/2010\/02\/16\/business\/16adviserside.html?_r=1&amp;ref=business\" target=\"_blank\" rel=\"noopener\">the rules<\/a>.\u201d<\/p>\n<p>(Wealthfront, as a registered investment advisor, is a fiduciary).<\/p>\n<p>Our two cents? Real change is coming about, but slowly, as educated consumers find market-based solutions. It\u2019s taken decades, but Vanguard, with its <a title=\"Upfront Blog on Schwab vs Vanguard\" href=\"https:\/\/canary.kcprod.info/blog\/compare-schwab-and-vanguard-etfs-price-war\/\" target=\"_blank\" rel=\"noopener\">super-low-fee approach and its unique corporate structure<\/a>, is now one of the largest mutual fund companies. A growing number of brokers are going independent, so they aren\u2019t obliged to sell funds owned by their parent companies. And there are more low-fee online options, like <a title=\"Wealthfront.com\" href=\"https:\/\/www.wealthfront.com\/\" target=\"_blank\" rel=\"noopener\">Wealthfront<\/a> and others.<\/p>\n<p>One of the experts quoted in Ms. Seigel Barnard\u2019s story suggested that if you want to test your brokerage\u2019s ethics, call the firm and ask to be put into a no-load Vanguard fund.<\/p>\n<p>\u201cIf you were to call up Merrill, can you get them to sell you and put you into a no-load Vanguard fund?\u201d said <a title=\"Bio: John C. Coffee Jr., Columbia Law School\" href=\"http:\/\/www.law.columbia.edu\/fac\/John_Coffee%20Jr.\" target=\"_blank\" rel=\"noopener\">John C. Coffee Jr.<\/a>, a professor of securities law at Columbia Law School. \u201cMy guess is you cannot.\u201d<\/p>\n<p>If you try Professor Coffee\u2019s experiment, please let us know in our comments section.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Last week, Susanne Craig and Jessica Silver-Greenberg of The New York Times wrote a smoking-gun story about the lack of ethics at JPMorgan Chase. \u201c[As JPMorgan Chase] became one of the nation\u2019s largest mutual fund managers, some current and former brokers say it emphasized its sales over clients\u2019 needs,\u201d wrote the duo. This is a [&hellip;]<\/p>\n","protected":false},"author":43,"featured_media":7259,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[1315,1282],"tags":[1300,1287,1322,1647,1301,1309],"coauthors":[1276],"class_list":["post-3131","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-industry-insights","category-investing","tag-fiduciary-standard","tag-financial-advisors","tag-john-bogle","tag-jpmorganchase","tag-investing-mistakes","tag-wall-street"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Wall Street Ethics: The Vanguard Test | Wealthfront<\/title>\n<meta name=\"description\" content=\"For decades Wall Street has thrived on a hard-core sales culture, with questionable ethical credo. 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