Subject: File No. 4-606
From: Matthew E. Lynch
Affiliation: President CEO, Capital Analysts

August 26, 2010

The fiduciary standard needs evaluation in the context of improving financial literacy and providing greater transparency. This does not mean more disclosure which the vast majority of investors will not read. In this context, I support the movement toward the fiduciary standard for those who give advice.

One goal of financial regulatory reform should be better-informed investors who understand who they are working with, what they getting, what they are paying for what they are getting, and the conflict of interest potential. This must be presented in plain English.

The movement toward a fiduciary standard is a sea change. Interestingly, the majority of financial professionals working with clients actually support doing what is in the best interest of the clients and believe it is good for business. Additionally, a vast majority of them do not anticipate much difficulty in conforming their practices to meet a new industry-wide higher fiduciary standard. A majority of investors also strongly support regulation that would hold all advisors to the same standard of service. (Source: Envestnet Fiduciary Standards Study, June 28, 2010)

Where are the objections coming from? They are coming from those who support existing business models and are afraid that changing the status quo will negatively impact their profits. Lets be clear: they are concerned that movement toward a fiduciary standard is wrong for their business model, not that it is wrong for investors.

Proposal for increased financial literacy as a goal of reform
I propose a solution that could provide a positive outcome for investors, while still allowing a variety of business models to sustain their profitability. It would also provide a path through what many see as a gray area in defining the fiduciary standard. This is based on what is the foundation of our great financial system: let the market (investors) decide.

Clients vary greatly in what they are looking for in a financial professional and also in their ability to understand financial services offerings. A properly educated investor can make an informed decision about what type of financial services professional to work with and what types of products and services to use. This financial literacy is critical and can be accomplished through a vehicle that has already proven it effectiveness over the years for another federal agency.

Attached is a brief white paper explaining the concept of a financial label adapted from the concept of the food label used by the FDA. This is followed by an introduction to how a financial label template could be used, possible options for template categories, and some sample templates. Financial professionals of all types could use this label with clients. It could be easily automated and phased in as the SEC deems appropriate. It also lends itself to a movement toward the fiduciary standard for those providing advice, while providing transparency to investors working with those providing products only.

This would educate investors, help them make informed decisions and, ultimately, allow the market to decide what products and services best suits its needs.

The SEC is making many steps in the right direction related to 12b-1fees, disclosures and C shares. I hope you will seriously consider the financial label concept as another way to improve the financial outcome for clients as you consider a fiduciary standard. I would welcome the opportunity to discuss this with you further.

(Attached File #1: 4606-2246a.pdf)
(Attached File #2: 4606-2246b.pdf)
(Attached File #3: 4606-2246c.pdf)