A broker friend of mine was recently venting about the matter of financial media personalities who, in his opinion, should be more accountable for the “advice” they dispense in their high-profile roles. I’ve heard this kind of thing before. Some industry professionals bemoan the fact that the Jim Cramers of the world are able to dispense advice from their platforms without the same restrictions as those with which regulated advisors must deal 24/7. It’s not the same thing, however. Anyone who is intellectually honest understands fully that Cramer and the rest of his ilk are not speaking in the capacity of professionals who have what any reasonable person would conclude is an advisor-client relationship. Cramer knows he is not that caller's financial advisor, and, more importantly, the caller knows Cramer is not his financial advisor. The appropriateness, in terms of the caller’s financial profile, of whether the caller should buy or sell a stock about which he is inquiring of Cramer is not Cramer's concern, nor should it be. People like Cramer are not dispensing advice in the way the industry construes that term; he is offering a solicited opinion on an isolated security or issue (isolated, in terms of the host’s level of involvement with the caller) – nothing more. Not he, nor the other personalities like him, are compensated by the callers, selling investments to them, or are otherwise engaging in the behaviors of regulated financial advisors; why should “know your customer” rules apply on behalf of people who are not your customers?
Here's the bigger issue, and it affects those in the industry even more than it affects the media "types:" when it comes to making financial decisions, too many have decided that consumers of financial products are tantamount to helpless children – that adults who are allowed to breed, drive cars, own guns, and do countless other things that most assuredly are loaded with risks to themselves and those around them, are incapable of taking ANY responsibility for their financial decisions, and that's simply ludicrous. Regulated professionals should be required to color between the lines, but just how narrow should those lines really be? Should customers really have what is tantamount to zero responsibility for the choices they make as consumers of financial
products and services? My aforementioned friend, and many of the others like him, mistakenly think that the Jim Cramers of the world are the problem here; their grievance, however, is not with the talking heads, but, rather, with an impossibly burdensome regulatory system that is so largely because of its selfish need to turn every consumer of financial products into a victim.