August 1, 2010
'Comments attached"
The suitability standard governing broker-dealers and registered representatives is a robust and heavily enforced standard and comparable to a fiduciary standard governing investment advise when it is applied and enforced.
Compliance costs-both in terms of finances and time are high, and those costs are eventually felt by clients.
Adding another layer of regulation means another layer of compliance, and even more cost to clients.
The specific licenses I hold,SERIES 6,63 involve SEC,FINRA and State continuing education in the areas of ethics and guidance for the customer.Complying with each license almost annually.
Time I spend on compliance has been ever increasing for the past 38 years. Internal and external compliance audits 2 to 3 times a year in my office and its a sole job for me in keeping up with compliance.
Not every area of compliance adds to consumer protection in my view.
The compliance requirements do impact my ability to serve my clients via time set aside yearly. The SEC know what the liabilities of a fiduciary duty could mean for my costs and and ability to serve my clients.
Moving to a fee-only model does not always result in better, unbiased advice. Example:B Madoff fee based guy,Russian spy was holding CFP license and others. I do not know if being forced to a fee only model will entirely protect me from liability because anyone today can be sued.Also not all clients can afford to pay up-front fees or are willing to pay.
I expect potential liabilities to drive up my errors and omissions coverage.
My ability to stay in the business is now at risk.
Being an independent advisor and receiving a commission or recommending to the client to purchase a proprietary product does not come into play for my business after 38 years of doing whats best for the consumer. Honesty and integrity is # 1 basis for me.