August 19, 2010
RE: File No: 4-606
Dear Ms. Murphy:
I am a financial planner and registered investment. In my practice, I have been servicing clients under a fiduciary standard of care since our beginning over 6 years ago. 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.
It is unfair to consumers that the quality of advice they receive from a financial professional is dependent on the professionals registration or title. Its no wonder consumers are confused, and do not know whether their financial professional is looking out for their best interests. I can tell you from my personal experience that adhering to the fiduciary standard of care and putting my clients interests ahead of my own benefits my clients and my business.
What does Fiduciary mean to You? Nothing? It should. Your financial health depends upon it
Situation: You go to a doctor for your health issues.
Question: Would you go to a doctor whose diagnosis and prescriptions were influenced by commissions he was paid by the drug companies?
Answer: Surely not
Truth: You or your insurance carrier pays him directly because you want his professional, unbiased advice. You can be assured that your doctor is providing the best advice because he does not consider his pocketbook when deciding the best course of treatment for you.
Situation: You may go to a broker for your financial health issues.
Question: Would you still go to the broker if you knew that his recommendations are biased by the various commission rates he gets paid?
Answer: Surely not
Truth: But brokers don't act as fiduciaries and are paid by mutual funds and insurance companies to sell you their financial products. Some companies pay higher commissions and you can be sure that the broker will recommend those products to you.
My clients recognize and understand that the advice I give them is in their best interests, because: my loyalty is to them first I will advise them with utmost good faith I will manage any conflicts of interests that may harm them and disclose those conflicts to them I get paid for the advice I give them and the investments I select for them I am required to choose from the best investments available keeping their interests first and I can charge a fee or commissions based on their needs and preferences.
Adhering to the fiduciary standard of care does not limit my ability to provide my clients with appropriate services and products. As a fiduciary, I can choose to operate in a business model that is best for my client. The key is fully disclosing, and avoiding and fairly managing conflicts of interest. Providing financial advice with fiduciary accountability does not reduce services to middle Americans. It insures that the services consumers receive will be in their best interests -- not in the best interests of the financial intermediary or his or her company.
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.
Jeffrey B. Broadhurst, MBA, CFA, CFP
Broadhurst Financial Advisors, Inc.
Independent Fiduciary Wealth Management
(215) 325–1595 Direct (866) 404–8022 Toll Free (215) 853–2563 Fax
1911 West Point Pike, Suite 301
P.O. Box 301
West Point, PA 19486-0301 USA