August 23, 2010
I am the CEO of an Ohio based financial services company and a principal of a broker-dealer. I hold the designations of Certified Financial Planner and Chartered Financial Consultant and I have over thirty years of experience in financial services.
As a business owner I would like to impress upon you the high cost in terms of both dollars and time that compliance costs my company and each registered representative each year. In order to comply with associations that I belong to and licensing requirements I must spend over 100 hours each year in continuing education. Each year I am examined by my broker-dealer and various insurance companies I represent I take firm element training and supervision annually and regulatory examination every two years. I am subject to both IA regulation and state regulation. I am also subject to FINRA regulation and each layer of compliance grows larger with each passing year.
I cannot open a new client account with at least thirty pages of disclosure being filled out and signed by the new account holder. I must employ a compliance officer at a cost of $70,000 annually just to comply with all the regulations that we currently have.
Because of the time and money involved in supporting our securities business I have fewer hours each yaer to spend with my clients giving them the help and advice they need and expect of me. The time and money I spend in compliance also adds to my cost of doing business and prevents me from being able to help smaller investors. This hurts me and the community that I serve,
In the thirty years of financial service work I have seen many certified fiancial planners do fee-only work for their clients. Has their service been better than mine? No,I don't think that it has because most of my plans actually get implemented while the majority of plans done by fee-only planners sit on a self and never get implemented because the writers are not paid to implement anything.
Many of the clients I serve could not afford to pay for a fee-only service and product implementation. The commission based service that I provide relieves the client from being forced to pay for advice and then pay a second time for product implementation. Over the years this has saved Americans a great deal of money and made affordable financial advice that used to only be made available to the very rich. As a result, the wealth of the middle class has grown significantly in our country. I have done all this without one complaint in over thirty years of service.
If the fiduciary standard is imposed what will happen to the liability costs of doing business in America? I alrady pay over $2500 annually for errors and omissions insurance and I am certain that this cost will go up if this new standard is passed.
In conclusion, I and my employees are heavily regulated already. We pay a very high cost in terms of time and money already just to satisfy the licensing and regulatory requirements imposed upon us already. What public good will be served by yet one more layer of fiduciary standard and what will be the cost of this new regulation? Can Americans really afford the ultimate cost of imposing this standard or will it make once again good financial advice something that only the rich can afford. I encourage you not to impose the fiduciary standard being considered at this time.
Gary L. Brockett, CFP, ChFC