Subject: File No. 4-606
From: George A Jacobs, CLU,ChFC

July 30, 2010

Currently I feel that there is more than sufficient regulation that applies to me as a life insurance professional who also is a Registered Representative. Suitability standards for my Broker-Dealer provide me as a registered representative with strong and heavily enforced standards. As I understand fiduciary standards governing investment advisers, there appears to be only minimal reporting and regulation.

Compliance costs are expensive in time and money and, clearly, clients eventually bear those expenses. If we add another layer of regulation, we simply add another layer of compliance, and guess who pays? Clients.

Currently compliance requires time, energy and expense. When there is written correspondence, we now literally make four copies for different files. This certainly results in extra cost, but it's required. How productive does this make me? Is it reasonable that increased compliance requirements will cause me to give better "service to my clients." That's not logical.

I hold life insurance licenses in several states. Every jurisdiction charges fees and requires Continuing Education. In addition, as a Registered Representative, I am subject to FINRA-specific Compliance requirements and audits by my Broker-Dealer. There are mandatory annual meetings that require time devoted to compliance education and procedures. In addition, I am subject to unannounced audits by my Broker-Dealer Compliance staff as well as unannounced visits by State examiners.

In my experience of about 40 years, I have visited with many people about their insurance and investment needs. Many people cannot afford to pay up-front fees. Other people simply are unwilling to do so. Therefore, the "included fee" structure of commissions and recurring investment fees provides an alternative which is fair to both client and agent/representative.

In conclusion, I do not believe that moving to a fee-only model will automatically result in better, unbiased advice. Circular reasoning says that the fee-only model simply protects representatives from liability. But then you should expect that additional regulation will increase cost and availability of errors and omissions insurance coverage. That cost eventually passes along to clients.

In my opinion, it will become impossible to continue in business if costs and liabilities become too great. Over-regulation may have the unintended effect of driving out of business the hard-working and honest agent/registered representative.