August 24, 2010
This is to comment on your proposed fiduciary standard and additional obersight. I as a 31 year financial professional find this standard to be a difficult standard to live up to, specially if I will be judged after the fact. I hold the series 6 and 63 licenses. In my counseling of clients we go over the risks of investing and in the years I have been practicing have not had a complaint. They all knew the risks that were inherent when they invested.
This would be similar to someone buying a lotto ticket then wanting to sue the government when they didn't have the right numbers. How can we be held responsible for a down turn in the market? Or for that matter getting our clients out of the market and have it go up then being sued by our clients because they were out of the market.
On another matter, that of additional oversight...
I have been in the business long enough that clients have come to trust me (otherwise I probably wouldn't still be in the business this long) and no amount of additional paperwork or disclosures will make them anymore informed than what I have been able to convey to them.
We don't know what will happen in the future and can only do what we can glean out of past performance and hope for the future. I am not a stock jockey. I don't derive most of my income from transactions. The major part of my compensation comes from assets under management so therefore my bias, if you will, is to try and keep people invested and stay away from the TV hysteria (TV needs hysteria to generate advertising revenue). This will be the best way to help my clients.
As to a personal matter, I remember getting notice some time back about a class action lawsuit concerning Xcel Energy stock I owned. By the time the lawsuit was settled the stock price had gone back to normal levels and I think I got less than $100.00. (I never sold any shares during the time in question and frankly, I was glad it dipped because I was able to buy more shares at the lower price from the dividend reinvestment program.) The point is that the only ones that won were the lawyers. They got millions and I got less than $100.00 Due to the amount of money spent on settling the lawsuit I would imagine it had an effect on the dividends paid out later on.
In conclusion, with this additional oversight and fiduciary responsiblity you want to impose, as I see it, you are opening the flood gates to further litigation but to no real effect on protecting the consumer.