August 29, 2010
I am Against the misguided Fiduciary Standard on Registered Representatives.
I will elaborate:
Over the last 15 years, and especially in the last 3 years, compliance issues for the Reg. Rep, has gotten ever more difficult and complex. I have seen many excellent advisors leave this business, with their biggest reason for moving on, increased compliance scrutiny.
Make no mistake, if it was needed to protect the public interest, or to provide a better product, I certainly would be all for the extra compliance standards.
But, they are not.
We Reg. Reps. see the last 10 years of additional regs as over reaching, non-productive, and ultimately driving up costs for everyone, which must be passed on to the consumer.
With the latest regs. passed and those proposed, it will be difficult to pass on these costs to the consumer Thereby, increasing my costs. The B/D won't eat them.
History has proven this point.
As a Rep that works out of my home, I don't employ anyone and do everything required to run a financial advising office. This includes typing this piece. As I am not a typist, it takes me a great deal of time to formulate a coherent response. Please forgive obvious errors.
I had planned on opening an office away from my home and hire staff this year. I recently acquired another Rep's book of business and was looking to use this base as a way to expand my business.
In all good conscience, now, I have to put this on hold.
Because with this potential change to the Fiduciary Standard, it would impact my business so negatively, I could not make money through expansion. It would cost me money. So, therefore, The hiring of 2 staff with a third after a year, and an additional junior advisor in a year and a half will have to wait. After a year and a half, you are looking at a potential payroll of $120,000. The amount I expect to make this year, by myself.
Sad, for me, my potential employees, and the public good the taxes would provide.
Our politicians keep talking about creating jobs. This is what we are talking about, isn't it.
It certainly won't create jobs by going to the Fiduciary Standard. It will drive more good advisors out of the business and reduce taxes paid to the govenments Federal and State.
I am in the business of solving financial problems for my clients, so my mind thinks this way.
So, I have a recommendation:
Drop these misguided Fiduciary Standard thoughts.
Reduce and streamline existing regulation.
And you will be amazed at how much better functioning and healthy the industry will be And, the number of new jobs created
Because regardless, of The SEC's, and all other regulator's conclusions, I and all the other advisers I know, work for our clients best interest. Period. Yes, we are in this business to make money. And we know, that the best way in which to make more money, is to do right by our clients. If they are successful, I will be successful.
The Fiduciary Standard hurts my efforts.
This will ultimately hurt the public, as well.
Edward R. Klesack, CLU, LUTCF, MBA, RFC