September 8, 2010
Compliance costs-both in terms of finances and time-are high, and those costs are eventually felt by clients. Adding another layer of regulation means another layer of compliance, and even more cost to clients.
I hold series 7, 6, 66, Life and Health, and Property and Casualty licenses. To maintain my licenses, I am required to have 3 hours of Ethics, 3 hours of Flood, and 24 hours of insurance continuing education. To maintain my series appointments this year, in addition to requirements from FINRA I will also be required to complete the following (annual requirement):
Anti-Money Laundering Fundamentals,
Ethical Actions Surrounding Suitable Recommendations,
Selecting the Right Mutual Fund,
Working with Seniors,
Variable Annuity Riders,
2010 Corporate RIA Overview (if assigned) and,
2010 Supervision Update (if assigned).
In addition I hold a CFP®, and AIF® designations with 16 hours of continuing education requirements and additional ethics requirements. I also attend 2 additional FINRA compliance meeting annually and undergo very stringent scrutiny with every application I submit on behalf of my clients. I am an active member of NAIFA (National Association of Insurance and Financial Advisors) and FPA (Financial Planning Association). I am 37 years old.
COUNTLESS hours are spent maintaining my licenses, processing paperwork, and continuing my education. All of these things make me a better agent and provide the tools necessary to make appropriate recommendations to my clients. The current requirements are stringent and robust enough for my supervision.
A fiduciary role for my clients would cause my liability to increase without any additional compensation. Not all clients should be charged a fee for service, nor would they be willing to pay a large fee for a small investment. This will hurt people that need guidance on insurance, basic investing, and education planning but do not warrant a (for example) $5,000 fee for a financial advisor. Since I would have no flexibility in how I am compensated either the client would have to pay a fee or not receive help. Unfortunate for the client.
I spend thousands of dollars annually maintaining licenses, attending classes/conferences, and paying for my errors and emissions insurance.
I truly believe my colleagues in the industry that are fee only advisors are working with only affluent clients and they do not realize the impact this legislation would have on families that are striving to save and protect their families. Not all investments are the same, not all products are the same and our clients need and deserve guidance on what is appropriate for their personal situation.
I am adamantly opposed to the new proposed legislation the basis that it is wrong for the client.