Subject: File No. 4-606
From: T. Taylor Payne
Affiliation: Payne Wealth Partners, Inc.
July 1, 2013
Dear Sirs,
I write to submit the following comments:
- Your request for data states “a broker-dealer is not uniformly considered a fiduciary to its customers.” I would comment that broker-dealers go to great lengths to appear as fiduciary advisers. The broker-dealer salespeople carry titles such as wealth manager, financial consultant, wealth advisor but their primary function is to sell product. This intentionally misleads the customer into a belief that they are receiving advice from broker-dealer employees when instead they are being sold product. A uniform fiduciary standard is not the answer, because then these same broker-dealers will simply work to have such a standard as benefits them. The answer is simply truth in labeling. Those who are selling product should not be allowed to represent themselves as an advisor or a consultant or a manager to the customer. They are a registered representative of the broker-dealer and should be labled as such.
- As to harmonizing regulatory requirements of broker-dealers and investment advisers, I wish to comment as to the inadvisability of such a step. The principles based Investment Advisers Act of 1940 has been effective in directing activities of investment advisers as fiduciaries to their clients. This should not be changed. It would be acceptable to simply bring the broker-dealer community under this same principles-based governance, but the broker-dealers have generally indicated they do not wish to bear the legal liability of such principles. The broker-dealers instead seek the protection of rules that give them the ability to not act in a client’s best interest so long as they can prove rules were followed. Now the broker-dealers wish to “harmonize” rules so they can bring more costs to the investment adviser community and reduce the rate at which they are losing business to investment advisers. Clearly the cost of implementing many new rules for our investment advisory business would be significant and material to our earnings. For this extra cost the client would be no better served or protected, and at some point we would be forced to either reduce their services or increase their fees—all for no ultimate benefit except to the broker-dealers who seek a means to better compete.
Thank you for this opportunity to comment on your File No. 4-606.
T. Taylor Payne, CPA/PFS, CFP®
Investment Manager, President
Payne Wealth Partners, Inc.
601 N. Cross Pointe Blvd., Evansville, IN 47715
Direct Line [redacted]
Company Line (812) 477-6221
www.paynewealthpartners.com