Subject: File No. 4-606
From: Raymond L Paul, CLU ChFC

August 5, 2010

After 50 years in the financial services industry, primarily life insurance, I have seen a climate of ever-increasing regulation, compliance and educational efforts aimed at legislating morality in my dealings with clients. For the honest advisor these efforts have required me to spend more and more of my resources, both time and money, without any advantage to my clients.
Nor has it eliminated the few crooks and con artists that feed in the same waters where I work. They will still flourish and until,the organizations they work for terminate them and all the other organizations refuse to hire them the public will continue to suffer. Since these people are the sex offenders of our industry, we need to find a way to remove them from the streets. My idea is a list naming these people. This shouldn't be difficult to compile. Everyone in the local industry knows who they are.
In my opinion these pariahs come in many forms and are paid in a variety of ways. I know fee-for-service organizations who continually promote equities for all people and circumstances and diss the use of permanent life insurance as 'an abomination that only benefits the insurance company and the agent selling it."
I also know stock brokers who continually churn their accounts under the guise of upgrading their client's portfolio. I know financial advisor's who use C shares and charge a fee, so they can tell a client they aren't paid commissions. My point is each of these unethical acts is occurs daily in my community, but short of getting the worst offenders out of the industry, government can not fairly legislate morality. When it attempts to do so it puts a burden on all of the honest advisors who have their client's best interests at heart.
As a case in point, I recently attended a four-hour class on ethics. Afterwards, I came away with the distinct impression that the forty or so people in the class just learned a bunch of new ideas for being unethical. Human nature being what it is, most of the particpants will chaulk up the experience as a big waste of time and money and go about continuing to make an honest living. A few, however, bent on profiting from the experince will undoubtedly put some of the ideas to use.
It's for these reasons I feel more intervention by government will only further over-burden and hinder the good advisor without doing a thing to stop the unethical practices of a few.