August 18, 2010
-August 18, 2010
RE: File No: 4-606
Dear Ms. Murphy:
I am a financial planner and the Principal of a Registered Investment Advisory Firm with about $23 million of assets under management. In my practice, I have been servicing clients under a fiduciary standard of care for 12 years. I strongly urge you to extend the Advisers Act fiduciary standard of care to all financial professionals who provide personalized investment advice to retail clients. Adhering to the fiduciary standard of care and putting my clients interest first has benefited my clients, increased their trust in me, and benefited my business.
I believe my clients feel assured that I will manage any conflicts of interests that may harm them and disclose any conflicts to them. I am required to choose from the best investments available in keeping their interests first.
I see no legitimate reason why broker-dealers and their representatives should not be held to the same fiduciary standard of care that registered investment advisors have willingly accepted. If broker-dealers choose to avoid that by maintaining the fiction that a suitability standard is as good as a fiduciary standard, then the SEC should insist that they have their representatives call themselves something different from financial advisors, such as brokers. This failure to differentiate is vastly confusing to the public and certainly unfair to those advisors who are actually committed to giving advice in the best interests of the client and the client alone.
It is spurious to claim that abiding by the fiduciary standard would reduce service to consumers. To the contrary, the current system of imprecise terminology and differing standards of care is hurtful to American consumers. The current confusion seems only to provide the most benefit to broker-dealers.
I urge you to recommend to Congress that it is necessary and appropriate in the public interest and for the protection of consumers to extend the fiduciary standard to broker-dealers, who provide personalized investment advice, and to initiate a rulemaking to achieve this long overdue consumer reform.