August 25, 2010
To all concerned,
My name is Jaford D. Burgad from Fargo, ND. I would like to inform you on my opinion as to why, changing the requirements to fiduciary standards for registered investment advisors/investment representatives would change the landscape for clients dramatically. I've been in this business, insurance agent/investment representative, for 23 years. If you go to this fiduciary standard, it will take most, I predict 60-70%, of these types of facilitators for insurance and investments out of the business. This means, your delivery system in which facilitates knowledge about choices to our citizens are greatly reduced. This lack of people, in this business, only means that the few that are left will gravitate toward the higher net worth client. Why should I spend 1hour each year with one client, billable, when I can spend 3hours or more, billable, with a wealthier client who has a need for a more comprehensive financial plan? Business is business and I will gravitate toward the relationship with the client who has the greatest need and most ability to pay for my services. This leaves the lower middle class, under upper lower class unserved who are now being serviced by this group of agents/investment representatives.(The lower class are not being served for they have no ability to pay for or invest in and the upper middle class and upper class are curently being serviced by fee based service reps or CPA-Fee and a investment representative)Understand this major contrast with what we have now available. We have a lot of people in the investment/insurance business that are out there everyday competing for business and we all know it. This makes us do the best for the client even more of a motivatiion than compliance concerns, for we know that if we don't serve/service our client there is always a lot of other representatives that will. That of course means we lost that client and we will never get that client back or their friends/family etc... What I do know is that most of the population as a whole is good people. This is no different in my business. Those that choose to take the wrong path will find that path, of choice, no matter what legislation will do or say about whats legal, ethical or moral. No law will prevent the bad from occuring in some people, it only is a way of punishment. If this is all your trying to do with this bill than I don't think you'll like your out come. Compliance, in my practice, does not protect my client. Compliance protects myself and my broker/dealer. How? My clients sign compliant forms that say they understand. We are to explain those forms so when they sign them they do understand. After explaining they say they understand while signing but I can guarantee that most clients don't but they trust you and give you there trust that you are doing the right thing and therefore are willing to sign that form. For them, it could just as well be blank. We all do this when we aquire a mortgage right. Do we read and understand everything? I think not. The client just signed a legal document that says they understand there for legally they can't say they didn't. So, the real question should be, how do we keep our current delivery system viable and help prevent the few in the business from making bad choices with the clients interest at mind? We now have 3 hours of ethics required in the state of ND for Insurance that all of us agents have to have every two years. This should be mandatory class room. Why, because in these classroom discussions we all get down deep into what is truly ethics vs what is just legal, ethics is a much greater judge of proper conduct. If you attended one of these meetings and heard people talking about bad conduct/unethical and you were doing these things (again, assuming you had to attend) than maybe this would help prevent you from doing it any longer or stop you from thinking of it if it was a thought. This with the current monitoring system I feel is more than adequate, again, I don't think we can stop every bad egg from spoiling. We do have to deal legally with those that do bad things and deter those that are about to. Our current system now legally deals with illegal actions but preventing we can work on as mentioned above. If this bill passes, what happened with UK will happen here. There is no way that our insurance companies will pay us commission unless they knew for sure that we were protected under this law so therefore they would only be able to let fee only advisors recommend their products. From an investment stand point, investment choice delivery, I actually see this bill adding on cost to all consumers not only the well to do.
Conclusion--Your insurance products sold by investment representatives/insurance agents will be dead/gone, your insurance agents also licensed for securities will be greatly diminished (60-70% or more),your securities products sold by all,acquired by all, will cost more.
I currently do and have always had my clients best interest in mind. This bill won't help someone do that if your not already doing so
Jaford D. Burgad
4610 Amber Valley Parkway Ste. E.
Fargo, ND 58104