Oct. 10, 2023
Dear Securities and Exchange Commission (SEC), I would like to provide more detailed feedback on the proposed regulation, recognizing the vital importance of safeguarding investor interests and ensuring the security of client assets. While I support the overarching goal of bolstering investor confidence, I believe it is essential to thoroughly assess the practical implications and potential costs associated with these proposed regulations within the financial industry. Excessive Compliance Costs: The proposed modifications could lead to a significant increase in compliance costs for financial advisors. The additional audit and documentation requirements, while well-intentioned, may create a substantial financial burden, particularly for smaller advisory firms. These added costs might ultimately be passed on to investors in the form of higher fees, potentially reducing the accessibility of financial advice for certain market segments. Increased Complexity: The new rules introduce a heightened level of complexity into the regulatory framework. This complexity may make compliance a challenging endeavor, especially for financial advisors managing diverse and complex assets or serving international clients. The need for detailed accounting and documentation could divert resources and time away from core advisory services, potentially affecting the quality of service provided to clients. Impact on Innovation: There is a concern that the proposed regulations may inadvertently stifle innovation within the financial industry. Financial advisors may become more risk-averse, hesitating to offer new and innovative investment solutions due to the heightened regulatory requirements. This could impede the industry's ability to adapt to evolving market conditions and provide clients with innovative and potentially more rewarding investment opportunities. Challenges for International Clients: The expanded compliance requirements, including the insistence on adherence to U.S. accounting standards for international clients, could create substantial challenges. This could potentially discourage advisors from working with international clients, limiting diversification opportunities for clients and impeding their access to global markets. In conclusion, I urge the Commission to carefully consider these concerns and conduct a thorough cost-benefit analysis before finalizing the proposed regulations. While the protection of investors is of utmost importance, we must also strike a balance that ensures the continued vibrancy and accessibility of the financial advisory industry. A measured approach that takes into account the potential economic impact and complexity of these regulations will help achieve this balance. Sincerely,