“In my many years of experience working in compliance, do you know how many fixed and variable annuities I’ve seen being invested in IRAs??? Countless.

“Investing a tax deferred investment within a tax deferred account simply does not make sense, except for very very few exceptions. … And when brokers answered me honestly as to why they picked annuities over mutual funds or even plain vanilla stocks??? Payout baby!!!”

That’s a compliance officer at Wells Fargo talking about the kinds of abuses that brokers — who advise clients about where to put their money, even if they aren’t “registered investment advisers” — inflict on their customers. For context: The benefit of an annuity is that taxes on earnings are deferred until withdrawals — but you get that benefit in any IRA, so there’s no point in putting an annuity (which has higher costs than an ordinary mutual fund) in an IRA. Yet in this case the brokers were pushing annuities because of the (legal) kickbacks they were getting from the annuity providers.

The passage above is from an email that the compliance officer sent to AdvisorHUB, a website aimed at financial advisers. The email argues that the asset management industry needs a comprehensive fiduciary standard requiring advisers of all kinds to put their clients’ interests first. This is something that the Obama administration is currently pushing for, as Alexis and I have discussed previously.

AdvisorHUB says that they are neutral on the question of the fiduciary standard. Yet they respond to the email this way:

“Still, this sort of story is the exception and not the norm. Advisors, whether fiduciary or not, seek to do what is best for their clients. A fiduciary standards existence isn’t going to stop bad actors.”

This is often what the argument against regulation boils down to: Most people are honest (trust us on that), and the dishonest ones will break the law anyway, so what’s the point? (Remember Alan Greenspan saying that market forces would deter fraud?) Which, of course, is just ridiculous. Rules influence behavior, and when people break them, the rules give you a remedy — in this case, the ability to sue.

As I’ve said before, the fiduciary standard is by no means a panacea. But if it makes some advisers think twice before putting their clients in a nonsensical investment, it would be a good thing.