August 24, 2010
While I hold the CFP designation and am a member of the Society of Financial planning and work under an RIA with many of my clients I do also have clients that wish to work on a commission basis in leu of fees. As a result I believe their should be a separation, like there is today regarding fiduciary standards and responsibility.
I encourage you to carefully consider if making a fiduciary standard apply to all representatives and all transactions really accomplishes the problems or creates a whole new set of challenges that will ultimately make things much worse than better.
There are many clients already that obtain much less by way of financial advice and recommedations as a result of choosing not to pay fees for advice. If a client has a 401k and askes a representative for recommendations the current laws prohibits a rep from giving any advice unless they charge a fee. In come cases average advice could be much better than no advice. Just because someone pays a fee does not in any way mean the advice is good. It is crazy to think anyone in leadership could rationalize that that is true.
While we all want to attempt to fix the problems of 2008 in the financial services areas lets not just look for political options and those that in the eyes and reports of the press sound good. Instead lets tackle the issues and not allow lobbies to persuade the SEC to put legislation in action that only benefits their cause. Make sure the clients still has some say in the advice they get and how they choose to get it.
My practice will thrive under the direction things are going but there will be many clients that will no longer get advice if they choose to not pay a fee and those clients by their own admission are very happy with the advice and strategies they have had in place for the last 15 years while not paying fees.
Respectfully submitted,
Anthony J. Schau