August 24, 2010
I currently hold a Series 6, 63, 7 and 24 licenses. Not only am I held to a very high suitability standard by my company for transactions by my agents but I also enforce them everyday in my compliance responsibilities as a registered principal. We also have a full time agency standards consultant on salary that costs the company alot of money to have an additional layer of compliance on a local level. His responsibility is to review client files, educate and train agents proactively. EVERY application submitted is further reviewed by a suitability department at our home office, which is the third layer of compliance.
I am required to complete a firm element meeting each year, anti-money laundering and ethics compliance tests, a regulatory element every two years and 20 hours of CE every two years. This is extremely time consuming and expensive to me. I spend at least 1 hour per week reviewing 3010 logs from detached agents, 4 hours per week reviewing cases with agents prior to them making recommendations, 4 hours per week reviewing applications and conducting unannounced supervisory reviews and at least another 4 hours per week in planning meetings related to compliance matters.
I am concerned that the "fiduciary standard" would force every agent to be required to obtain an additional license such as a 65 just to conduct their normal business because they would have to be fee based planners in order to meet the strict definition of that standard. There is already a specific platform for agents that desire that (and they are regulated). To force all agents to move to that way of doing business would devastate an already shrinking field force of ethical registered representatives. I believe that a large majority of agents will quit and this will cause the exact opposite desired effect for the consumer, because they will not even have an agent to work with.
To the best of my knowledge there is not ANY correlation between consumer protection and a fidiciary standard. In fact, the suitability standard looks forward and tries to prevent harm to consumers through ongoing and frequent FINRA and broker-dealer audits and compliance processes. That is much better for the consumer, the company and the agent.