August 26, 2010
I would encourage you not to eliminate the suitability standard alternative for regulation of registered representatives. I am an IAR and as such am already subject to the fiduciary standard for my planning clients. I believe that consumer education as to the difference between the two standards in addition to clarification of the meaning of those standards to the people who are held to them (advisors) would be in the best interest of the consumer.
Much of the training in our industry is provided by companies who employ agents or representatives. As manufacturers of products and services they want to have a sales force to distribute their products. Creating the blanket fiduciary standard would effecively eliminate that relationship. It would also increase the barriers for entry into an industry that already has too few advisors helping the public. This would ultimately reduce access to trained financial professionals for the average consumer. We would have fewer advisors and those who remain would increase their fees due to this scarcity, which would create it's own spiral. I know that many of the people I have served over the years, when I was subject to the suitability standard only, would not be able to, or interested in, paying the fees I now charge to clients. I have helped those folks with estate planning issues, taxes, creating a successful retirement, sending their kids to college, managing debts, improving their businesses, ownership of real estate and other issues to their great benefit. They would no longer have access to that type of advice from other sources if this change is implemented.
As the world gets more complex in the area of financial planning, more and more people are intimidated by the choices they face and as a result, avoid making those choices and the planning that goes with it. Without professional advisors being accessable, even more will avoid making plans for their future. Experience shows that without planning, folks tend to fail. This would increase dependence on government and charitable programs which are already overburdened.
Please don't establish this standard as the only standard in our business, it would have extremely negative effect on our population and their ability to take responsibility for their financial futures. Instead take the resources available and apply them to the better education of existing consumers and greater enforcement and clarity of current regulations.
Regards,
Roger L. Gainer ChFC