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Consider yourself, and particularly your father, fortunate, as the cost of eduction here was affordable. This cost often winds up being very expensive, relative to net worth, for most.

The Obama administration favored putting brokers and product sales persons(those holding a series 6 or 7 FINRA securities sales license) on a fiduciary standard, that would provide a legal basis of responsibility for their advice. Depending on which definition of 'fiduciary' would be used, this could conceivably have meant that no advice could be rendered that was not optimal, as opposed to 'suitable', to the client, lest the 'adivsor' and their company be held financially liable for undesirable outcomes, including not just the 'stock drop' phenomena, but also with regards to illiquidity, misallocation for estates, opportunity costs and so forth. The Senate Finance committee had included this in their financial reform legislation, but my understanding is that this standard of service has been dropped from the final bill. Suffice it to say, the securities and insurance industry fought this with all the lobbying might their deep pockets could purchase.

Odd though it might sound, I tend to agree with much of the industry's opposition to this standard, due to the huge bureaucracy and expensive limitations on doing just about anything financial. IMHO, personal financial education, full disclosure and longer look-back periods following product purchase is the right approach. The greatest fear in the minds of those who churn expensive financial products, is education, not regulation.

BruceM
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