August 24, 2010
The suitability standard governing broker-dealers and registered representatives is a robust and heavily enforced standard. I think it's crazy that I have three level of audits (inter-office, inter-company, third party) and have a clean record with no complaints, but Investment advisors not affiliated with a broker-dealer let me know they can write whatever they want with no concerns for compliance.
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.
I have had to hire a full-time, licensed assistant to help me with all the compliance paperwork for my book of business, and I make roughly $70K a year and then take out her $30K salary because you pay more for a person who can touch all this compliance paperwork. Each license also costs $$ to get study materieals, $$ to take the test, and then more $$ to get licensed in each state.
It is no wonder to me why so many advisors are going independent RIA so that they can get around all the compliance and fees. Are you aware that this is how they are recruiting others? I think this is sending the opposite message that regulation would like you to believe is in the public's best interest.
Please do not add on another layer, but make compliance more equal to both sides.