August 30, 2010
August 30th, 2010
Regarding File Number 4-606
Dear Sir or Madam:
My name is Shashin Shah and I am the owner of SGS Wealth Management, Inc. My firm is uniquely positioned to be governed by the SEC and FINRA. I am also bound by the CFA and CFP Code of Ethics. I have over 16 years of experience in the investment industry and have taught over 2000 Financial Planners nationwide through various courses. I am currently a Subject Matte Expert for IMCA as well.
I can say, without hesitation, that the investing public is confused about what a "Fiduciary Standard" is and what Advisors owe their clients.
The current system of two standards of advice is very confusing to the general public. Being bound by both systems, I defer to the system that is held to a higher standard- Fiduciary Standards that put my client's goals in front of my firm's goals.
Unfortunately, not every advisor believes they should be held to a higher standard and that laws are too stringent to begin with. Below are some direct responses requested:
1- The effectiveness of legal or regulatory standards is sufficient in my opinion. The threat of fines in a financial business are well understood. Clear access to the past fines and rulings or advisers should be available to the general public on ONE website.
2- Regulatory gaps exist for those governed by two standards and how each applies. Clear English explaining the higher standard is superior to the lower standard would help the public and advisers understand what standard prevails in a conflict.
3- I will submit again that retail customers do not understand the difference or even that one exists. The irony of the term "retail" customers insinuates a "sales force". Under fiduciary standards, the individial is a client, not a customer.
4- Different standards are confusing only because individuals do not know standards exist.
The other items are covered at length by colleagues at my parent firm.
I believe it is time to protect the public. Average "Financial Advisers" make 4-5 times what the average American does and belonging to the profession should be a privilege, not a right.
I would advise to adhere to the more strict standards in either case and help educate the general public.
One way to educate would be to clarify what terms are acceptable. IE- Financial Consultant/Broker- FINRA, Adviser Representative- SEC. Attorneys, Doctors, and CPA's all know who they are, but we do not. Ours include, with no reference to standards:
Stockbroker
Broker
Account Executive
Financial Planner
Financial Adviser
Adviser Representative
Financial Representative
Portfolio Strategist
Wealth Consultant
Wealth Manager
Personal Financial Planners
Financial Analysts
Financial Specialists
Financial Counselors
Investment Advisers
Portfolio Manager
Capital Strategist
Wealth Management Adviser
... And in every case, you can be governed by either organization. To add to the confusion, here are the designations available to "Advisers" (42 of which are "Certified"):
Accredited Asset Management Specialist (AAMS)
Accredited Business Accountant (ABA)
Accredited Buyer Representative (ABR)
Accredited Buyer Representative Manager (ABRM)
Accredited Estate Planner (AEP)
Accredited Farm Manager (AFM)
Accredited Financial Counselor (AFC)
Accredited Land Consultant (ALC)
Accredited Management Organization (AMO)
Accredited Residential Manager (ARM)
Accredited Rural Appraiser (ARP)
Accredited Senior Appraiser (ASA)
Accredited Tax Advisor (ATA)
Accredited Tax Preparer (ATP)
Accredited Wealth Management Advisor (AWMA)
Associate of the Casualty Actuarial Society (ACAS)
Associate of the Conference of Consulting Actuaries (ACA)
Associate of the Society of Actuaries (ASA)
Board Certified in Estate Planning (BCE)
Board Certified in Insurance (BCI)
Board Certified in Mutual Funds (BCMF)
Board Certified in Securities (BCS)
Certified Annuity Advisor (CAA)
Certified Annuity Consultant (CAC)
Certified Annuity Specialist (CAS)
Certified Asset Protection Planner (CAPP)
Certified Buyer Representative (CBR)
Certified College Planning Specialist (CCPS)
Certified College Planning Specialist (CCPS)
Certified Commercial Investment Member (CCIM)
Certified Divorce Financial Analyst (CDFA)
Certified Divorce Planner (CDP)
Certified Employee Benefit Specialist (CEBS)
Certified Estate Advisor (CEA)
Certified Estate Planner (CEP)
Certified Federal Employee Benefits Specialist (CFEBS)
Certified Financial Planner (CFP)
Certified Financial Services Security Professional (CFSSP)
Certified Fund Specialist (CFS)
Certified in Financial Management (CFM)
Certified in Long-Term Care (CLTC)
Certified International Property Specialist (CIPS)
Certified Investment Management Analyst (CIMA)
Certified Investment Management Consultant (CIMC)
Certified Investment Specialist (CIS)
Certified IRA Services Professional (CISP)
Certified Management Accountant (CMA)
Certified Manager of Community Associations (CMCA)
Certified Pension Consultant (CPC)
Certified Philanthropic Development (CPhD)
Certified Property Manager (CPM)
Certified Public Accountant (CPA)
Certified Real Estate Appraiser (CREA)
Certified Real Estate Brokerage Manager (CRB)
Certified Regulatory Compliance Manager (CRCM)
Certified Retirement Administrator (CRA)
Certified Retirement Counselor (CRC)
Certified Retirement Financial Advisor (CRFA)
Certified Retirement Services Professional (CRSP)
Certified Senior Advisor (CSA)
Certified Senior Consultant (CSC)
Certified Senior Specialist (CSS)
Certified Tax Specialist (CTS)
Certified Trust Financial Advisor (CTFA)
Certified Wealth Preservation Planner (CWPP)
Chartered Advisor for Senior Living (CASL)
Chartered Alternative Investment Analyst (CAIA)
Chartered Asset Manager (CAM)
Chartered Estate Planning Practitioner (CEPP)
Chartered Federal Employee Benefits Specialist (ChFEBS)
Chartered Financial Analyst (CFA)
Chartered Financial Consultant (ChFC)
Chartered Investment Counselor (CIC)
Chartered Life Underwriter (CLU)
Chartered Mutual Fund Counselor (CMFC)
Chartered Portfolio Manager (CPM)
Chartered Property Casualty Underwriter (CPCU)
Chartered Retirement Planning Counselor (CRPC)
Chartered Retirement Plans Specialist (CRPS)
Chartered Trust and Estate Planner (CTEP)
Chartered Wealth Manager (CWM)
Community Insurance and Risk Management Specialist (CIRMS)
Elder Care Specialist (ECS)
Enrolled Actuary (EA)
Enrolled Agent (EA)
Estate Planning Law Specialist (EPLS)
Fellow of the American Society of Pension Actuaries (FSPA)
Fellow of the Casualty Actuarial Society (FCAS)
Fellow of the Conference of Consulting Actuaries (FCA)
Fellow of the Society of Actuaries (FSA)
Financial Analyst Designate (FAD)
Group Benefits Associate (GBA)
Large-Scale Manager (LSM)
Life Underwriter Training Council Fellow (LUTCF)
Master Financial Professional (MFP)
Master Government Appraiser (MGA)
Member of the American Academy of Actuaries (MAAA)
Member of the American Society of Pension Actuaries (MSPA)
Member of the Conference of Consulting Actuaries (MCCA)
Personal Financial Specialist (PFS)
Professional Community Association Manager (PCAM)
Professional Plan Consultant (PPC)
Qualified Financial Planner (QFP)
Registered Employee Benefits Consultant (REBC)
Registered Financial Associate (RFA)
Registered Financial Consultant (RFC)
Registered Financial Planner (RFP)
Registered Financial Specialist (RFS)
Registered Health Underwriter (RHU)
Retirement Plans Associate (RPA)
Wealth Management Specialist (WMS)
With 18 potential titles and 101 designations avaliable, there is little confusion on why the general public needs your help.
Along with efforts to create systematic standards for Adviser, I would HIGHLY recommend reviewing titles and designations to help clarify who is who.
Please contact me if I may be of further assistance.
Sincerely,
Shashin G. Shah, CFA, CFP