October 28, 2010
I have been an insurance professional and registered representative for over 27 years. While I generally support your modification of the 12b-1 rules I have two major concerns with broker dealers setting commission levels:
1.This creates an ethical dilemma for someone in my position.If a B/D offers no commission, is that in the best interest of the client? If so then I won't work with someone for free and the middle income market will suffer.
2.Your proposal to apply a fiduciary standard to transactions involving financial recommendations coupled with the proposed revision of 12b-1 creates potential for massive conflicts of interest between me, my client and my B/D. Your competitive environment will be a boon to trial attorneys who will sue everyone except the lowest (NO) commission B/D for fiduciary violations. There won't be any competition because no financial rep in their right mind would work with clients under such risks.
Thank you for your consideration of these remarks.