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J Bannon Comment On Regulatory Notice 22-08

J Bannon
N/A

I found out about the request for comment through https://www.leteveryoneinvest.com/ which in my opinion gives very misleading information about what FINRA is trying to do here. First, I think FINRA's enforcement of existing rules and regulations is extremely poor and that should be addressed before anything else. What's the point of adding additional suitability rules when the agency doesn't back what currently exists? Second, I think that Americans should be free to invest in what they want. However, the financial services industry is extremely predatory, particularly when it comes to the elderly and less financially literate, and people need protection from common predatory practices. So how do we balance this? I think the primary issue behind most financial services problems is information asymmetry. In many other industries products must carry standardized labeling for consumer information, but this is missing in finance. There needs to be a "Nutrition Information' for financial products which summarized important things. It should list things like previous and anticipated volatility, maximum exposure to loss, maximum potential gains over a period, tax impacts, and -crucially- it should enumerate who benefits when the investor purchases. Part of the basic information delivered with all broker products should be information about the broker themselves. Brokers should declare up front how they are paid, and whether they are accepting a fiduciary duty (and the implications there). Certain riskier products should carry a "Smoking causes cancer" type warning and list risks and common problems with those products. Things like variable annuities should say something pretty close to "Warning: If your broker sells you this, then they are probably trying to rip you off". Brokers should have to document when they give all this information and it should be archived online and always accessible by their customers and by any future auditors.