August 3, 2010
I want to comment on the proposal governing broker/dealers and having them held to a fiduciary standard.
Today, I carry a Series 7, Series 65, life insurance licensed and I am a CLU, ChFC and CFP. In my practice, we have regular examinations to ensure we're in compliance. In much of the work we do today, we are held to a fiduciary standard of oversight but it is not all areas. I can tell you that it probably requires about 20% of my staffs time to keep compliant with our fiduciary standard, and I have five staff members. Hence, on average, I am devoting one staff person just to keep up with the administrative paperwork related to compliance.
All compliance requirements add additional costs to managing my practice, ultimately resulting in fees I have to charge to cover all the compliance requirements. As a result, overall costs are higher when we have all of the additional compliance requirements.
In my practice, costs would go up if the entire practice is held to a fiduciary standard, because of the additional paperwork, administration and reporting.
Across the industry, I can see many individuals who would likely not work with lower income clients if this standard was held because of the additional costs of administration. It would drive investment and insurance professionals to work only with higher income clients who had a greater ability to pay fees because of the additional compliance requirements. The net result is that middle America gets less service.
As you look at investment and insurance professionals in the industry, there are always those who don't put their clients interest first, but the professionals who have been in this industry for a long time, stay in and succeed because they do what's in the best interest of their clients. Additional administration will just cause additional costs for the SEC, additional costs for all registered brokers and at the end of the day its the consumer who loses the most.
I hope you will take all this into consideration as you're evaluating the next steps on this. If you want to speak with me directly on any of my thoughts in this, I would be happy to do so. I have 27 years of experience in the industry and would be happy to give any additional insight.
Thanks,
Robert L. Erkel, CLU, ChFC, CFP
I want to comment on the proposal governing broker/dealers and having them held to a fiduciary standard.
Today, I carry a Series 7, Series 65, life insurance licensed and I am a CLU, ChFC and CFP. In my practice, we have regular examinations to ensure we're in compliance. In much of the work we do today, we are held to a fiduciary standard of oversight but it is not all areas. I can tell you that it probably requires about 20% of my staffs time to keep compliant with our fiduciary standard, and I have five staff members. Hence, on average, I am devoting one staff person just to keep up with the administrative paperwork related to compliance.
All compliance requirements add additional costs to managing my practice, ultimately resulting in fees I have to charge to cover all the compliance requirements. As a result, overall costs are higher when we have all of the additional compliance requirements.
In my practice, costs would go up if the entire practice is held to a fiduciary standard, because of the additional paperwork, administration and reporting.
Across the industry, I can see many individuals who would likely not work with lower income clients if this standard was held because of the additional costs of administration. It would drive investment and insurance professionals to work only with higher income clients who had a greater ability to pay fees because of the additional compliance requirements. The net result is that middle America gets less service.
As you look at investment and insurance professionals in the industry, there are always those who don't put their clients interest first, but the professionals who have been in this industry for a long time, stay in and succeed because they do what's in the best interest of their clients. Additional administration will just cause additional costs for the SEC, additional costs for all registered brokers and at the end of the day its the consumer who loses the most.
I hope you will take all this into consideration as you're evaluating the next steps on this. If you want to speak with me directly on any of my thoughts in this, I would be happy to do so. I have 27 years of experience in the industry and would be happy to give any additional insight.
Thanks,
Robert L. Erkel, CLU, ChFC, CFP
Northwestern Mutual Financial Network
Wealth Management Advisor
Northwestern Mutual Wealth Management Co.
PO Box 717
Prior Lake, MN 55372
952.447.6047