August 24, 2010
I am writing in response to the "Fiduciary Standard" being considered for financial advisors. I believe this a truly an awful idea for our industry. How can an advisor feel confident in making any recommendations to our clients if we know anyone can look back and sue us if they feel things were not done in their best interest - hindsight is always 20/20 and all markets are not within our control including fixed income and highly liquid assets. What happens if we recommend a CD for a client paying .5% and two years later they see that investing in the stock market would have returned more and they decide to sue (even though they are a conservative investor). We can't win. We are already regulated enough. I spend at least 30 percent of my time just with continuing education, completing suitability forms and suitability calls and meetings with our home office making sure that my recommendations are suitable. If we continue on a path of more regulation and liability, I am afraid that many advisors will leave the business and then where will our clients turn to for advice? I am already currently subject to an annual compliance review from my company where they review files and check the suitability of my recommendations. This process typically takes 4 hours. Every recommendation I currently make is also reviewed by our suitability department. How much is enough? I urge you to keep the suitability standard for the good of our industry and our clients.
Sincerely,
Jonathan Haugen