August 24, 2010
I am writing today to oppose the proposed fiduciary standards on registered representatives. I do not believe that fiduciary duty governing investment advisers provides greater investor protection than the suitability standard governing broker-dealers. The financial services industry is heavily monitored by FINRA and our broker/dealer compliance departments. I spend a lot of time doing compliance training, reviews, and documentation of client meetings, and record keeping, all assuring I keep my clients best interests as the reason for any recommendation I make. I also must show to my broker/dealer, when submitting paperwork, that I have done the proper amount of factfinding/data gathering before making any recommendations. I am required to do annual reviews and face audits annually to assure I am conducting business properly.
I believe I am already acting in the "best interest" of my clients. The Act does not define what the rules are for compliance with a legal "best interest" standard - thus subjecting registered representatives like me to the potential of never ending lawsuits. For example, is "best" the cheapest recommended product? The "best" premium relative to the benefit of the product? The product with the "best" historic underwriting and service standards? Is it the one from the carrier with the "best" rating? The fiduciary standard in essence adds a vague legal liability standard that looks back (sometimes after many years) and is enforced after the fact by the SEC or trial lawyers who have perfect vision in hindsight.I disagree that the fiduciary standard has protected consumers better. Basically, the fiduciary standard looks back and enforces breaches retroactively through SEC enforcement or private lawsuits. The suitability standard looks forward and tries to prevent harm to consumers through ongoing and frequent FINRA and broker-dealer audits and compliance processes. Please consider the negative impact this will have on our industry and more importantly, our clients.