August 13, 2010
More regulation is not the answer. Adding another layer of regulation means adding more compliance and even more cost to clients. The suitability standard for broker/dealers is already sufficient and is forward-looking as opposed to a fiduciary duty that tends to look backwards and impose a legal liability standard.
I already believe I act in the "best interests" of my clients, but to impose another standard for compliance makes the "best interest" issue subject to a great deal of interpretation. Is it the cheapest product? Is it the product with the "best" service standard?
I hold series 6,63, and 65 licenses. If I am forced to comply with a fiduciary duty on all of my business as an advisor, I might have to move to a fee-only model for all clients. What if a client wants to open a Roth IRA and contribute $5000 per year. Can he afford to pay me an advisory fee for managing his small account? I don't think so.