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This column originally appeared in Forbes.

Last month the Securities and Exchange Commission accused Goldman Sachs (NYSE:GS) and its junior banker Fabrice Tourre of securities fraud. Warren Buffett, the Berkshire Hathaway (NYSE:BRK.A) founder who is also an investor in Goldman, is standing firmly behind the firm's leadership, saying he has seen far worse elsewhere on Wall Street and finds nothing wrong with what it did in this instance. He's even said that if Goldman's chief executive, Lloyd Blankfein, were to step down, he'd wish there were an identical twin who could take his place.

When the greatest investor of all time, who has nurtured an image of irreproachable morality, speaks, we have to listen. But is Buffett right? His position is unconvincing. Let me tell you a brief story about why something needs to change on Wall Street.

A decade ago I was finishing graduate school and wasn't sure what career I wanted. Wall Street hovered at the recruiting booths, so I applied for financial advisor positions with Merrill Lynch, Morgan Stanley (NYSE:MS) and Citigroup (NYSE:C). When I went in for a final-round interview with Smith Barney, a division of Citigroup, one of my interviewers asked me, "Where would you invest your clients' money?"

I had read Benjamin Graham's The Intelligent Investor, so I happily responded that I would put some money in indexes, to take advantage of the low fees, and then apportion the rest based on my clients' time and risk horizons. The interviewer hunched over like a lion about to take a chunk out of gazelle and growled, "You are wrong. You put money wherever you will get the best commission. Most of your clients are stupid and don't know anything about the stock market. If the S&P 500 goes up 20% in a year, they probably don't know it. All you have to do is show a positive territory on the monthly statements." My expression made it clear I wondered how he could sleep at night. Needless to say, I got rejected that day.

Was Citigroup's financial advisor doing anything illegal? No, probably not. Unethical? You bet. He was doing what was best for him and not for the friends and family who trusted him with their money.

For a little background, financial advisors used to be called stockbrokers, until most big banks changed their title to make them sound more trustworthy. At the end of the day, financial advisors are basically just salesmen. They don't really choose stocks, a job that is left to a division somewhere else; they sell, sell, sell, by building up their books of clients.

How do financial advisors build up their books? In a number of ways, but they commonly start by getting friends and family who trust them to let them manage their life savings, and make sure they make enough for retirement or their families' educations. The key element is trust. Now let's go back to that financial advisor from Citigroup who asked me where I would put my clients' money. He clearly didn't see himself as an advisor, but I am sure the clients who put their money with him did. Citigroup had built up a reputation for trust and excellence, so it stands to reason that its clients would trust its advice. Why else would they pay those high fees?

That is the problem with Wall Street today, shown so clearly by Lloyd Blankfein in his recent testimony to Congress. He argued that his firm is a market maker, not an advisor, and that the companies that use his firm represent sophisticated investors. They use Goldman to make trades, he argued, not because they trust Goldman's advice but because Goldman has products they want. I don't think most clients would agree with him.

Take a look at Goldman's own website, and click on the "Services" tab. There are a lot of advisory services there. They use the term "advising" repeatedly on the site. Sorry, Goldman, but you can't have it both ways. You cannot say you are trusted advisors for only some parts of your business, like investment banking, but not others. Clearly people and institutions work with Goldman because they think it is the smartest and gives the best advice.

And that is why I'm so disappointed in Warren Buffett for coming out in strong support of Goldman Sachs on the grounds that Wall Street has seen worse. What kind of a reason is that? Maybe there is worse on Wall Street. Who cares? If what the SEC alleges Goldman did turns out to be true, then something is rotten there. It's like saying some pyramid scheme isn't bad because Bernie Madoff's was worse. That's not just illogical but foolish.

Would you trust your money with Goldman right now? Do you know when Goldman is your advisor, and when it's just a simple market maker? Goldman needs to rebuild its reputation for client service and trust, as Blankfein pledged to do at Goldman's annual meeting this month. It needs to do so not only with public relations and marketing initiatives but also with concrete behavioral change. If it doesn't, it may not be around in 20 years.

This was a time when the Oracle of Omaha should have come out strongly against the unethical but still legal side of Wall Street. But I guess we can't blame Buffett. He has billions riding on Goldman's continued strength, as well as on that of the rating agency Moody's (NYSE:MCO), which gave triple A ratings to so many skunks.

Wall Street firms need to start looking after all of their clients better, and not only serving themselves and the bigger clients, like John Paulson in the Tourre debacle, who give them fat fees. That's what being a true advisor is.

Disclosure: None

Source: Warren Buffett Is All Wrong About Goldman