Wednesday, December 11, 2013

Tis the Season


Today is audit day. Every year someone impeccably dressed from the headquarters of my Broker-Dealer shows up at my office door looking very official. He or she demands to see a few randomly selected client files. Then they want to see all of my compliance files. There’s the correspondence file, the checks received blotter, and the thankfully empty customer complaint file. Then he or she disappears into the conference room where they pour over it all looking for a mistake. Eventually they leave without saying anything except, “If there’s a problem, you will hear from us.”

Somewhere in the witches brew of my DNA is a molecular strain that predisposes me to rebel against authority. I have always struggled with the concept of having a boss, which is most likely why I ended up working for myself. Still, there is no such thing as total independence. Everyone has some form of a boss. In addition to my wife, and the IRS, I must ultimately answer to the suits at my Broker-Dealer. I do so reluctantly. I have never been able to buy into the fiction that they are “on my side, and that we are all in this together.” My view has always been that they perform their intense oversight of my business to protect themselves, not me. If I became a liability they would run away from me faster than a southern democrat running away from Obamacare in November.

Nevertheless, I never fear these annual audits for one very simple reason. In thirty years, I have never done anything intentionally deceitful to a client. I have never taken advantage of a client’s ignorance. I have always tried to do what was in his or her best interest, not my own. I say this not as a boast, but rather because merely as a practical matter, honesty is so much easier than deceit. Imagine how Bernie Madoff had to feel every time his office was audited. His mind must have been filled with tortuous worry. Would all of his schemes escape scrutiny? Would an indiscreet moment or an ill-filed report turn up? I cannot imagine having to endure that every minute of every day. Honesty allows for peaceful sleep. Honesty doesn’t require a good memory. It turns out that your Mom was right all those years ago when she warned you that if you became a liar, your lies would eventually catch up with you.

Now, this is not to say that I have nothing to fear from these audits. I am not the most organized person on the planet. My record keeping skills often leave something to be desired. But, administrative mistakes seldom get you carted off in hand cuffs. Better to be unorganized than a liar. I guess Bernie was the worst of both worlds…an unorganized liar.

When this audit is over with, I’ll have to get prepared for next week’s OSJ audit. Tis the season!