Subject: File No. S7-09-09
From: Paul J. Carroll
Affiliation: CFP - Sole Proprietor

June 9, 2009


I run a small but tight shop. We take GOOD care of clients and are more than willing to be audited by the SEC to show that our clients have survived the carnage of 2008.

However, we cannot afford this. By running a tight shop with modest fees and sticking to low cost, efficient investing, there's no margin to afford these audits.

A proposal: Audit the custodians. They take the fees for me. Have them flag any account where the fee's withdrawn exceed a very modest benchmark: Maybe 1.5% (higher than any fee I charge any client).

This proposal will cost us less and cost less to enforce. Yet it will more effectively flag for SEC examination any advisor that's withdrawing a (possibly) unreasonable amount from an account.

Otherwise, if you continue with this venture to punish the ONE segment of the industry that's actually taken GOOD care of clients, you will find yourself with the unintended consequence of increased costs for mid-sized investors that far exceed any value and, exacerbate the problem whereby I cannot afford to cater to those investors that most need my help, the under $300,000 crowd will become the under $500,000 crowd.

What a sad shame it would be to burden my 40 clients with $8000 ($200 each) additional regulatory fees when a simple audit of custodians would do the same trick for maybe $2 per client per year.

Please, let reason prevail. And yes, do audit. Do check the custodians. Do come visit me. This is all good for the client up to and until the cost overwhelms my ability to pass the cost to the client. At that time I retire and go to Spain (or somewhere equally warm and pleasant). And the client finds himself some state-regulated insurance salesman who can sell some junk annuity and rape the client, legally, with embedded fees of up to 5% a year.

Is this really the outcome you want?


Paul Carroll, CFP, MS Finance, Good Guy.