August 24, 2010
Gentlemen, I write today to ask you not to impose a fiduciary standard on Broker/Dealers and their registered reps. The premise behind this effort is based on the incorrect perception that the legal "fiduciary duty" (Which is incredibly vague) governing RIA's provides greater investor protection than the suitability standard governing Broker/Dealers. The fiduciary standard looks backwards to enforce breaches retroactively, whereas the "suitability standard"looks forward and tries to prevent harm to consumers thru ongoing training, compliance audits and FINRA compliance processes. It is a robust and heavily enforced standard that works and is pro active not reactive.
In addition the amount of time and resources already spent on compliance (Firm element CE, Regulatory element CE, compliance reviews, OSJ meetings, E O insurance, encrypted databases, technology upgrades, and staff) is very high and I am happy to do it, but to add an additional layer will not serve my clients, and will make it even more difficult to run my business. If I am forced to move to a fee only model to protect myself from liability, it will not serve the majority of my clients as they will be unable or unwilling to pay it. In closing this whole effort is misguided and will be counterproductive for the investing public. I ask you again, please do not impose a Fiduciary standard on Broker Dealers and their Reps. Thank you