Subject: File No. DF - Other Initiatives
From: Troy M. Smith, CFP

August 16, 2010

Comment Regarding Expanding Fiduciary Standard:

I am for expanding the Fiduciary standard and to have the standard regulated by the SEC and/or the states in a uniform way.

As the Commission may be aware, there are many advisers that advertise themselves as fiduciaries. I see nothing wrong with this, but being a fiduciary does not mean all conflicts of interest disappear. There is no such thing as a financial engagement that is free of all conflicts of interest. For example, advisers who charge hourly have an incentive to bill longer. Advisers who charge to manage assets, have incentives to increase the assets rather than advise clients consume or pay down debt. No matter the method of fees, or the absence of commissions, there are always conflicts of interest. Fiduciaries have a duty to disclose these, not state there are none.

It should be a deceptive and misleading practice to say an advisory engagement is free of conflicts of interest. A quick search on the internet revealed the following:

Advisers advertising client engagements as "conflict free"

Advisers advertising they have "No conflicts of Interest":

There are many advisers that fail to disclose when they have a duty to disclose. The above are examples of false and misleading disclosures.

As the SEC considers how they apply a fiduciary standard, please also consider how advisers communicate that standard.

Thanks for the opportunity to comment,

Troy M. Smith, CFP