August 24, 2004
I am in favor of the current broker dealer rule and keeping it as is, exempting brokers from the investment advisor act of 1940.
In my opinion a certified financial planner, or so called fee based planner may not necessarily have a clients best interest at heart. Fee based can mean hourly fee, or fee based can mean charging a management fee based upon assets under management. Most independent financial planners charge a mangement fee based upon assets. Is this truley independent and objective advice ? Lets assume a client has 1 million dollars under mangement with a fee based financial planner. The planners fee would be 10,000 per year assuming a 1 fee. Now lets assume the client wants to payoff off his home mortgage of 500,000. Should he do it?Well if he does the planner is now only getting a 5000 fee. 500,000 x 1.
Who are we kidding here ? To be truly fee based you need to charge an hourly fee without receiving a fee for selling products.
Leave the rule alone.