August 31, 2010
The suitability standard governing broker-dealers and registered representatives is a robust and heavily enforced standard. Corporate compliance at larger firms is well managed already and through education, training, mandatory meetings, and industry recertification the compliance element is addressed to a very high standard. The cost associated with even further regulation will be passed to clients and the general public, thus creating addition costs and fees in products and services. Additional oversight is not necessary continued enforcement is the answer. Addional regulation is costly and thus will transend to the general public via additional ME expenses, product costs, service fees, etc. I am not in favor of this additional regulation as it is ultimately not in the best interest of the general public.
Current compliance costs are already high, additional layers of compliance lead to higher costs for the general public, which ultimately results in less rates of return, or in the form of fees to the general public. Additional regulation = Less Service + Elevated costs to the public + Additional "Red Tape" associated with the inability to perPermit well managed firms and ethical advisors to do their job for clients.
Please do not add additional regulation and oversight, enforce the regulation America already has. Additional oversight leads to additional time, paperwork, costs, and more ineffectiveness for the financial services industry.
In recent history and troubled times the enforcement and regulation of current FINRA, SEC, NASA, etc. could have managed events such as the Madoff scandal, not additional regulation for all of the financial professionals and firms that are performing their roles correctly. Do no penalize the general public and these ethical companies and advisors for a few bad apples.
Current industry already requires licenes such as the 6,7,63,66,24, life, health, and varios other certification (state specific) for such products and services as Long Term Care, managed accounts. Most Larger brokerage and insurance annuity companies already require these licenses, but also mandate online and in person training, certification, and re-certification, as well as corporate compliance programs. Our current branch already has a staff of approximately 10 people for less than 90 persons. Addional regulation would permit for greater ineffectiveness in costs and managment. Additional compliance takes away from time to service existing clients.
Additional liabilities of a fiduciary duty could mean for an insurnace and investment industry, which is ruled by babyboomers an additional obstacle to hire younger folks in an aging job force. Why would we do this as there are already a shortage of advisors both in financial and insurance oriented position. The inherent risks with further regulation are creating additional barriers to entry for an industry which greatly needs additional, quality advisors/agents. The absolute cost in "over regualtion" leads to a path of less service to clients, additional costs to be in business, and ultimatley provides this negatice impact to the same general public the regulatory authorities are trying to assist.
Additional Liability and Fiduciary responsibility would lead to an environment where advisors charge continuous management fees, a commission + fee model to pay for addional liability coverages and this cost is always passed to the general public. Why, Why would we actually want to hurt the general public with additional cost these types of cost provide negative consequence to net investment return. Clients would have to pay more out of pocket to get the same or similar advice as to what they are currently receiving.
THE ANSWER TO THE FINANCIAL SERVICES AND INSURANCE INDUSTRY IS NOT ADDITIONAL REGULATION, FIDUCIARY RESPONSIBILITY FOR ALL PRODUCTS, AND HIGHER LIABILTIY, BUT BETTER REGULATION, EDUCATION OF ADVISORS AND ADVISORY FIRMS, AND CONTINUED TRAINING AND MONITORING OF THE INDUSTRY.