Jul. 26, 2018
Dear Honorable Jay Clayton Chairman United States Securities & Exchange Commission,
I recently started a new degree at Muma College of Business, University of South Florida in Tampa, Florida. Students graduate with a degree in Personal Financial Planning from the business college and are being trained in the competency and ethics that consumers think they are getting when they hire a financial planner. I decided to get my Ph.D. in Personal Financial Planning from Texas Tech University at the age of 56 (just graduated 2 years ago after having an MBA in finance and a CFP and having worked in finance for over 30 years. My salary is now going backwards but I am committed to my mission. My mission is to change the way the industry works and to make sure people understand the difference between a broker who is trained to be a salesperson and a 100% fiduciary advisor who is trained to offer competent solutions and recommendations, which includes knowing what you don’t know and referring the client to someone who is trained in the specific area in question.
I still work as a planner and advisor since it keeps my teaching fresh. The primary focus of my work is in understanding what my client values and what they want out of life. Money is simply a tool to help them achieve their goals. For this reason, planning and responsible, educated assessment is the primary value I deliver. I also help manage financial assets but that work should never be done exclusively without understanding the client’s situation and what type of risks and vulnerabilities they have in their life. I do not sell products and always make my recommendations based upon merit and appropriateness of the recommendation, as if the client is my relative and I just want the best for them.
As an RIA, my fiduciary advice is contingent upon my deep relationship with my client and my extensive financial knowledge. It is not the incidental advice given by brokers who don’t even know what they don’t know since many brokers have never taken even one financial class (licenses such as the series 7 are extremely superficial and should not be thought of as an indication of competency or a replacement for a good college level financial class). I fully disclose all fees and even an analysis of underlying costs that my client may incur so that my client fully understands what they are paying. I do not sell anything. My client is the boss. I firmly believe that the educated customer is the best customer and I make certain my client understands what I can help them with (such as risk reduction) and what I can’t help them with (such as what the market will do next week).
Consumers need to understand the difference in how financial advisors work. The wealthy and the savvy already understand this and they seek out advisors such as myself. Unfortunately, it is the unsophisticated and vulnerable individuals who really need responsible, expert and ethical advice but don’t understand the difference.
Much of the difference stems from the two different regulations; the SEC Act of 1934 and the Investment Act of 1940 and what is required to be compliant with these regulations. I am most concerned about those advisors who work under both regulations and switch hats based upon their own needs without letting the client know if they are working as a fiduciary or not. I encourage consumers to ask their advisor to sign a fiduciary oath saying they will legally commit to work with them as a fiduciary 100% of the time. If they sign, then they are genuinely willing to work in your best interest. If they hesitate, they are either restricted based upon their own human capital (they are not educated or competent to give advice in the client’s best interest), their firm won’t allow them due to the firm's agenda or the advisor’s own selfish needs. It is that simple.
I could go much further in discussing this topic and I am happy to discuss either on the phone or in person if you would find it helpful. Please consider me a knowledgeable and concerned resource.
Thank you for your time and attention. I know the various players in this industry do not make your job easy. Please let me help.
Sincerely,
Laura