July 2, 2009
There is no doubt that the recent crisis has confirmed to us (and alas belatedly to Mr. Greenspan) that the wolves cannot be allowed to self regulate. The greedy will always put their needs ahead of their clients’ needs. So regulation is necessary (as is enforcement). But subjecting those who deduct fees from client accounts when that is the only condition evenly remotely connected to having custody of client assets is simply unwarranted.
I am a small, independent RIA. All my clients’ assets are held by a third party (in my case TD Ameritrade) who independent of my office issues regular statements. I am required to send the client an invoice noting the fee being deducted from their account (thought this is NOT the case for brokerages). So I am acting at the clients’ request with full disclosure. Making me subject to COSTLY surprise annual audits will do absolutely nothing to benefit the client (indeed, I would have to raise my rates to cover such costs). I suggest you abandon this notion and start pursuing alternatives that WOULD increase disclosure to and safety of the consumer.
My thanks in advance for your consideration.
Bobbie D. Munroe CFP®