Major Changes Are Happening Within Financial Investment Industry - YouTube

Michael, there's also been some major  changes taking place in the finance industry  

and those changes could have big impacts  on investments and dispute resolutions.  

So tell us what's happening on that front. Sure, Sara. So this is something that's near  

and dear to my heart. I work and I represent a lot  of investment fraud victims, regular people, main  

street investors. And you're seeing a significant  shift that frankly, most people are not even  

recognizing, most people are not talking about and  it's very subtle, but it's extremely significant.  

And what's happening is the traditional model in  the financial services industry is, is brokers,  

brokerage firms, but it's shifting away now to  registered investment advisors. And brokerage  

firms they are, are, are regulated, they're  monitored by FINRA, the financial industry  

regulatory authority. These RIAs are regulated  by the SEC and by state regulators and what's  

happened is you've seen a huge boom where people  who were previously brokers are now becoming  

registered investment advisors. They're leaving  the big firms they were a part of, and they're  

going off on their own as a solo individual or  1, 2, 3 individuals with the firm and investors,  

mainstream investors, don't understand the  difference of this. So you see a lot of very,  

very small firms where the regulations are not  as consistent, where the compliance systems are  

not as consistent and this is creating a number of  issues and problems for investors. You're actually  

seeing, there's 14,000 registered investment  advisors. Today, there's only about 3,500 or less  

brokerage firms. So the shift is significant  and there's a lot of reasons for it and a lot  

of regulatory arbitrage that's happening. So we're hearing that there's something  

like $110 trillion being managed by these  RIAs, is what we're calling them. Now,  

what effect does this have on investors? Are  we talking about big business investors or are  

we talking about mom and pop investing their  401ks, their retirement plans? Tell us that. 

Sure. So you're, you're exactly right. And  there are some, sure, there's some institutional  

investors, but it's 61 million clients, that  $110 trillion you talked about is 61 million  

clients. The lion's share of those clients are  regular mom and pop main street investors. People  

who are trusting an advisor to act in their best  interest. And that's the whole thing about this.  

Registered investment advisors are supposed  to be fiduciaries, which is great, that's,  

it to us, that's significant, fiduciary means  put the client's interests first. You have to  

do what's best for the client. But the reality  is that fiduciary standard is not being enforced  

and in fact, the regulations are extremely  inconsistent. There's not enough regulatory  

examinations going on. You actually see examples  where customer complaints are at a five-year high,  

but regulatory actions, disciplinary actions  are at a five-year low. Restitution is at a  

five-year low. So what's happening is you see this  shift and it's creating all sorts of problems. 

Arbitration is another issue where these clients  are being forced into arbitration and it's  

incredibly inconsistent. There's mandatory  arbitration clause. In FINRA, there's one  

forum. Instead now, you're getting divided into  numerous forums and there's different rules.  

Some people create their own rules. There's a,  we saw recently with a case where somebody had  

a Christian conciliation rules and it's not  a standardized forum. This makes it very,  

very complicated and to make matters worse,  these firms, they're very small. It's not  

a big brokerage firm that has thousands and  thousands of employees. So if something goes wrong  

and clients suffer harm, these firms are not even  required to have insurance, Sara. So you and I,  

in Florida, we have to have insurance  to drive our cars. But these registered  

investment advisors who are managing trillions,  tens of trillions of dollars of retirees money,  

if they don't, if they get sued, if  they do something wrong, if they make  

faulty recommendations, and they don't have  to have insurance and they don't necessarily  

even have to pay the award, which is a huge  issue. So these issues need to get addressed. 

Yeah, that's very, very significant and  I hope you continue to address them.