August 29, 2010
I strongly support rules for brokers and dealers that would require them to act in the best interest of their customers and to be held to the same high standards as registered investment advisers.
I have an elderly friend in her 80s who is a widow. Her husband had obviously planned well for her financially, setting up two trusts at their bank, putting money in several CD's and having a diversified portfolio. After his death, my friend's "financial adviser," who was a stockbroker, persuaded her to liquify all her assets and place them in one account with the broker's institution. Because he had been her husband's broker and she trusted him, my friend did as he advised. She was not a sophisticated, knowledgeable investor and subsequently lost a great deal of money in commissions to him, the sales of which also put her into a higher income tax bracket. Her CPA finally made her aware of what was occurring, but by then, my friend's retirement funds had shrunk considerably.
This is deplorable, especially because unscrupulous brokers and dealers can easily take advantage of the elderly or naive investors who put their trust in them.
I urge the SEC to pass regulations that would 1) require brokers and dealers who operate on commission to make that very clear up front when talking to potential clients, and 2) to hold brokers and dealers to the same fiduciary standards as registered investment advisers.