July 28, 2010
I am a Registered Investment Advisor. The way I understand the 'old' 1940 ACT, I have a fiduciary responsibility to my clients when advising them on their financial choices. While I am told that there is no official definition I know it to mean something very similar to the ERISA rule mandating fiduciary responsibility in that ACT. I act accordingly with my clients.
I gave up my Series #7 license (I used to call it NASD #7) so I could be FEE-ONLY (in contrast to fee-based, which means I could sell product for a commission to a customer - OR - I could agree to charge a fee to any one customer). I know that as an RIA, with fiduciary responsibilities to my client, I now say and do things that benefit my client which I was unable or unwilling to do when I had a Series #7. Me and my clients enjoy that new relationship with trusted advice and counsel that I now have with my clients. It is my goal to never give up that fiduciary relationship with my clients.
It is my thinking that a sales rep can NOT have a fiduciary responsibility with their customers - by definition. It is very strange to me that there is an effort to consider such a rule or mandate from my regulatory agency, the SEC. I will challenge anyone to convince me that sales people can also be fiduciaries during their sales process with their customers.
Any choice to form a new rule that waters down my fiduciary responsibilities to my client to allow sales people to be fiduciaries under your new regulation would be an offense to my current professional fiduciary responsibilities. It would also challenge the public to find the fiduciary relationship with trusted advice and counsel that they now have with me - and other RIA's who faithfully work under this fiduciary rule.
I hope that whatever choice you make you will be clear in your final definition of what a fiduciary is so the public can hear and understand what you are saying. I would strongly think some people will NOT qualify as fiduciaries under your definition. So then I encourage you to consider finding a way to identify those of us who ARE fiduciaries and letting the public choose to work with us when desired. A clear distinction from the SEC to the public will further clarify the differences which are currently unknown by the gullible public.
If you are still reading, thanks for your thoughtful concern to this important matter to our nation.