August 26, 2010
RE: File No: 4-606
Dear Ms. Murphy:
I am a Certified Financial Planner practitioner and Investment Advisor Representative with approximately 50 active/ongoing client relationships (many others with whom I work on a more sporadic basis), and handling approximately $25M in assets-under-management. In my practice, I have been servicing clients under a fiduciary standard of care for 15 years. I strongly urge you to extend the Advisers Act fiduciary standard of care to all financial professionals who provide personalized investment advice to retail clients.
It is unfair to consumers that the quality of advice they receive from a financial professional is dependent on the professionals registration or title. Its no wonder consumers are confused, and do not know whether their financial professional is looking out for their best interests. I can tell you from my personal experience that adhering to the fiduciary standard of care and putting my clients interests ahead of my own benefits my clients and my business. A recommendation made for any reasons other than that it is the best course of action for the client will eventually reveal itself as such one way or another, the client will come to this realization. The client will be damaged (financially), trust will have been breached, and the relationship will be over.
For a whole host of reasons, including the following, my clients recognize and understand that the advice I give them is in their best interests:
o My loyalty is to them first.
o I will advise them with utmost good faith.
o I will manage any conflicts-of-interests that may harm them, and disclose those conflicts to them.
o I get paid for the advice I give them, and the investments I select for them.
o I am required to choose from the best investments available keeping their interests first.
o I can charge a fee or commissions based on their needs and/or preferences.
Adhering to the fiduciary standard of care does not limit my ability to provide my clients with appropriate services and products. Quite the contrary as a fiduciary, I can choose to operate in a business model that is best for my client. The key is fully disclosing and fairly managing any conflicts-of-interest that cannot be avoided. Providing financial advice with fiduciary accountability does not reduce services to middle-class Americans instead, it insures that the services consumers receive will be in their best interests, rather than the best interests of the financial intermediary or his or her company.
I urge you to recommend to Congress that it is necessary and appropriate in the public interest, and for the protection of consumers, to extend the fiduciary standard to broker-dealers, who provide personalized investment advice, and to initiate a rulemaking to achieve this long-overdue consumer reform.
Michael G. Grinnell
450 East 7TH Street
South Boston, MA 02127