August 24, 2010
The suitability standard governing broker-dealers and registered representatives is a robust and heavily enforced standard. I believe that the current oversight is a sound and effective program.
I take compliance and suitability very serious and turn away prospective clients who expect me to compromise the rules. I hold a series 6 and 63 and as required under current standards, spend 20-25% more time dealing with compliance issues. Typically, I deal with office audits annually by my broker-dealer which requires additional time. In Tennessee, we also are required to pay an additional $400 annually for a 'Professional License'.
This and other requirements already in place do not offer any more consumer protection. In fact, the non-licensed people who influence the public might be more of a problem than those of us who are licensed and following all the current rules and regulations. Non-licensed influences on the general public include accountants, bankers, tv/radio advisors, teachers, and federal/state agency personnel.
At this point in my career, I'm not sure that it makes sense to take on a fiduciary role. A change to this could result in me taking a 'fee-only' model or dropping the securities part of my practice altogether. Most clients with smaller account balances will be left without anyone to talk with other than a customer service rep at a call center (impersonal). My current EO insurance is at the maximum which I can afford, so any increase would logically mean closing shop on securities. The results of more liability and more expenses would result in the closing of our office leaving more of the public without a personal advisor to handle concerns and more calls to the generic call centers (where no advice can be given).