August 24, 2010
The suitability standard governing broker-dealers and registered representatives is a robust and heavily enforced standard. This standard is best for the client and best for the adviosor as it allows me to do my job
Compliance costs-both in terms of finances and time-are high, and those costs are eventually felt by clients. Adding another layer of regulation means another layer of compliance, and even more cost to clients.
Here are some of the ways I am held to a high degree of professional standards already:
o licenses I hold are regulated and require ongoing testing annually and regular background information to maintain.
o I spend roughly 30-40 hours annually on staying curretn and compliant in meeting current standards
o Adhering to these standards of compliance requirements impact my ability to serve my clients?
I wonder what the liabilities of a fiduciary duty could mean for my costs and my ability to serve your clients.
o Will I be forced to a fee only model to protect myself from liability?
o Will moving to a fee-only model result in better, unbiased advice?
o Can my clients afford to pay up front fees or will they be willing to?
o Will the liabilities drive up my errors and omissions coverage?
o Will I stay in the business if liabilities become too great?