Subject: File No. S7-25-99
From: Gary L. Braden
Affiliation: Vice President, Broker Dealer, IFPS, Member NASD SiPC

January 17, 2005

I applaud your proposed ruling that makes having discretion over the clients account one of the main determining factors in if a person has to register as a RIA. As a member of the FPA I have read everything they have put out on the issue and find their position very shallow and self serving.

On the 24th of December the President of the FPA Elizabeth Jetton sent an email to all members encouraging us to send comments concerning the Broker/Dealer rule ... hense your receiving a large number of form letter responses I did not respond to the SEC at that time but sent the response provided below to Elizabeth Jetton concerning her email to me as a member of the FPA.

my response to her

Since the FPA would fall on its backside without the financial support of those in the business that are not Registered Investment Advisors I find it puzzling that those organizations continue to pay for FPAs bills since at every turn you seem to bite the hand that feeds you. I also find it puzzling that the spun off brokerage element of the FPA has not put something out to the members on their positions. The problem with the Broker-dealer rule is the silent majority is not doing anything and the squeaky wheel is going to get all the grease.
If this was a case of fees versus commission anyone with 8th grade math skills would realize that 1 percent fees or higher quickly cost more than paying an up front sales charge on investments kept with the same fund family or stock/bond portfolio. For those clients that have over one million in investable assets those assets could be invested without sales charges being applied. When talking with existing or prospective clients those that charge fees state that it puts them on the same side of the table as the client and that there are no conflicts of interest and then when they discuss their business model in the professional journals/magazines that cater to fee management they comment about how after a two or three year transition period that the cash flow into the business is much more stable and a larger amount.
Ethical standards are not any better and could be worse due to a lack of oversight for the RIA segment of the business. The chances of a RIA going through a State or SEC inspection/audit are much less likely than those mandated inspections and supervisory reviews required for/by firms and individuals regulated by the NASD. Of course the CFP board of standards has this grandiose idea that they can police the fee management industry. Numerous listings of individuals stealing/misappropriating clients funds are just as prominent on the RIA side considering that most operations go unattended so could be much worse. Fiduciary my foot Where I grew up, ethics would be best described as what you do when you know no one is watching. Being an RIA does not give that to you.
I came into the FPA via the IAFP organization. I found the IAFP more balanced to the industry as a whole and the longer I have been associated with the FPA the more I have asked myself why? After years of asking by the Firm president I finally broke down and attended the FPA convention in Philadelphia last year including both Estate strategy sessions on Saturday. Over the ensuing four days, at every opportunity attendees from our firm made an effort to mingle with different groups of attendees and share ideas. I found the two primary reasons for attending the conventions were: to obtain the continuing education credits needed to maintain their CFP designation and to try and recruit new people into their own organization. I found the numerous group discussions with attendees on various facets of financial planning very shallow and the knowledge base wanting. I expected to absorb a tremendous amount of knowledge from the various scheduled sessions and for the most part found that the level of detail was below my current level of knowledge. In one case the session misrepresented tax law that was the session dealing with Non-U.S. citizens Estate Tax strategies and then the session that was the most frustrating was the one dealing with Senior Citizen strategies. The session was presented by one of the noted Advisors in the industry and after more than an hour hearing about how he was personally affected by his sister being killed riding her bicycle attendees got a burst of strategies in the last 5 minutes of the session. It was so bad, some even walked out before the end and gave up their much needed continuing education credits if they were CFPs.
On a separate note, I found the transcripts concerning Elizabeth Jettons testimony in front of the Congressional committee on the military interesting since it would probably require a Brigade size element of 5000 men to pool their assets together to meet her minimums and am reasonably certain that she is clueless concerning what benefits the military members currently have and what their financial and family protection needs really are. But then she was speaking to a Congress that only 25 percent of its members have ever served a day of military service so they dont understand either.
It is time to renew my FPA membership and I really have to ask myself why since you no longer represent me and more times than not really offend me?


Gary Braden
Vice President,
Broker/Dealer IFPS
Member NASD SiPC