Subject: File No. 4-606
From: Mark L Prendergast, CPA

August 18, 2010

A uniform Fiduciary Standard is required to have any integrity in the financial markets, especially at the consumer level. I give the following reasons for applying a uniform Fiduciary Standard to all:
1. HOLDING OUT. If a person holds themselves out to be giving investment advice, it should not matter if they represent an RIA or they are selling for a BD. Clearly for the wirehouses and most broker-dealers, they are not simply executing trades as if we are in the 1960s. In order to compete in todays financial marketplace, they must provide advice. They market themselves on television commercials as holistic advisors (e.g., Total Merrill), and put titles on their business cards such as advisor, consultant, counselor. Clearly they hold themselves out as advice-providers, not product-sellers. On their commercials, do they make any reference to selling a product? No, its about the comfort that a person gets from working with an advisor.
2. CONSUMER PERCEPTION. The consumer-public has no idea that different standards apply. Please refer to the SECs Rand Study. Should it be the SECs job to educate the American consumer on the difference? NO Or should it be the SECs job to create a standard that applies to all who are providing investment advice? YES
3. DO WHATS RIGHT. Is this process about doing whats right for the American consumer, or doing whats convenient for sales organizations?
4. INCIDENTAL. The SEC should define incidental using modern day standards. For example, incidental would apply to a CPA who, while s/he is preparing a tax return, comments about the clients portfolio lacking diversification, explains the benefits of diversification, and refers the person to an investment professional or suggests they research investment fundamentals online. To contrast, a person who does a retirement plan analysis and then sells product to accomplish the goals, no one can reasonably call the advice incidental to the selling of the product.
5. RELIANCE ON ADVISOR. The buyer receives advice, relies on it, and acts on it. Certainly NOT incidental by any definition. This advice might be incidental in the sellers mind, but certainly not in the buyers mind.
6. SWITCHING HATS. It is particularly confusing that a person can operate as an RIA by providing advice, and then can switch hats and sell a product to implement the advice and hide behind a lesser standard. Clearly the whole arrangement of advice implementation is one activity. To call it two (2) activities is absurd.
7. DISCLOSURES. The American consumer cannot navigate the plethora of documents to be signed and determine where there is disclosure. Buried in a prospectus? We all know what that looks like. The Fiduciary Standard addresses behavior and places a common law duty on the person with whom trust in their finances has been placed.