Subject: File No. 4-606
From: Ernie J. Franz, Jr.
Affiliation: CLU MBA Economics

August 28, 2010

I have been licensed to sell securities since 1969, first through Industry Savings Plans and since 1986, through Administrative Services, Inc. These companies offered mutual funds to employees through enrolling in payroll deduction plans through their employers. The vast majority of employees who enrolled in these plans had incomes of less than $50,000/year and family incomes under $75,000/year. We offered both load and no load mutual funds through our programs. Most employees choose to have no-load mutual funds and life insurance. Both of these broker dealers are now closed down due to increased regulatory burdens. Now these employees have no opportunity to accumulate for their retirement. It is not practical to service these groups with a fee set up on accounts less than $100,000 which the vast majority contained. These people require the most explanation and provide the least income to the producer (they enroll for $25/week). RIAs on a fee basis of 1.5%-2% are not going to want these customers. The result of all this regulation is no availability of product to these folks. Now you want to require more regulation? Good luck finding someone to provide the service.

Once I found out about this fiduciary standard where the client must give the RIA authority to buy and sell for their account, I just let my license for variable products simply lapse. Many others I know are doing the same. The question in my mind is who do you want to protect. Is it the consumer or Wall Street and the too big to fail banks who get bailed out by the taxpayers?

This best interest standard is already being met by the suitability standard. It is either suitable or it is not looking forward. It seems to me that this arbitrary best standard applied across products is like a lawsuit waiting to happen. How can you provide a best interest when best is not defined. And when best interest is defined one, two or five years after the fact, it is a lawyers field day. No thanks, find someone else to service this group with this kind of regulation—Im not interested