Subject: File No. 4-606
From: Nancy Lininger
Affiliation: Compliance Consultant, The Consortium

August 24, 2010

Here is what I foresee for the future: We will be under one regulatory regime. No longer will we have the broker/dealer and registered investment adviser industries. There will be one registration for firms one fee one filing. One registration for Reps one fee one grand slam exam. One full disclosure document used by all to replace the Form ADV.

Wealth Management, Life Planning, Financial Planning, Asset Management, or simple buy and sell securities recommendations will be done under one roof. There will be a choice of fee structures, based on client suitability. Some specialist firms will continue to exist wealth management on one side of the spectrum and traditional brokerages on the other but all under one regulatory scheme. The New Investment Act (NIA) and its rules and regulations will be streamlined. Some rules will apply for transactional trades, and other rules will apply for services that are advisory in nature but all under one coordinated NIA.

Whether advice (no matter how grand or small a scale) is provided as a fiduciary or what is suitable, is not as important as getting rid of the do-badders and effective regulatory oversight by the regulators. Whichever the label (fiduciary or suitable), it should be consistent for BDs and RIAs but the label is just a label. There will be legal consequences for those that dont follow the rules.

Advertising standards should be identical. Why does one type of financial advisor get to use testimonials (within the regulatory constraints of course), but another advisor is prohibited from using a testimonial. Despite the thinking that testimonials can be misleading (only highlighting good comments without the bad), prospective clients must be able to have access to valid references in doing their due diligence for selecting a financial advisor.

BDs have rules that are too constrictive, which are bound to get them in trouble with the regulators. When there is so much minutia to know and follow, you are bound to step out of bounds. RIAs dont have enough rules and oversight to give them sufficient guidance as to what should or should not be done. The rules and regulatory oversight must meet in the middle.

All firms have conflicts to disclose, be it by commissioned persons or fee-only advisors. A standard disclosure document is needed because clients dont know if they are working with a BD or RIA and should not have to know the difference.

Nancy Lininger
Founder/Consultant
The Consortium