Subject: File Number 4-606

August 29, 2010

Chariman Schapiro & Other SEC Staff Members:

I have very little to gain personally, or professionally, by advocating that the Commission impose a full fiduciary standard upon brokers, broker-dealers, insurance agents and others. You see, since 1991 when I became an investment advisor agent while at Prudential Securities, I’ve been a fiduciary to all my clients. My business became 95% fee-based, and in 2004, when I formed TABR Capital Management, we became a 100% fee-only firm.

We routinely provide our clients a written summary of their situation, with full transparent disclosure of our management fees and how we are paid, BEFORE we are hired. I humbly and gratefully submit that my skills in investment strategy and other areas, along with those of my partner, Steve Medland, make our firm very different than most, and we are likely in the top 2% of our profession in terms of assets under management and other industry metrics. But, that is not my point. My point is, we have attained that place by simply doing the right thing, and fully aligning our interests with those of our clients. Going a step further, virtually every investment dollar of our firm’s principals and staff is invested in an identical manner to that of our clients. In my view, what we do in certain areas is not hard to do. Virtually any advisor can do some of the things we do, yet VERY few do.

From a selfish standpoint, I’d love to keep our marketing edge. And, if FINRA and the insurance and banking industry continue to have their way, I suspect there will never be a strong and full uniform fiduciary standpoint. However, I cannot help but think of the clients we’ve encountered during the last several years who’ve been sold equity index annuity contracts with 15 year surrender periods, and god knows, 10% or 15% commissions to the broker / agent, with hardly any disclosure to the client. I have to wonder how it is that products like this actually exist, and have been approved for sale? Surely, if there was a standard that an advisor had to put their own money into the same products they sold to clients, do you honestly think even one contract would ever be sold?

So, I ask, where is the regulatory agency that is doing the right thing---actually protecting the client? I then think of another retired client who joined us in the past year. After learning about her situation, we discovered that her “advisor” (no bigger oxymoron than this person) had placed over $1.1 million of her and her husband’s $2 million portfolio into illiquid, non-tradeable partnerships, almost all of which have gone bankrupt due to fraud. The broker/dealer of this “advisor” was a firm called Harrison Douglas. Do you think they’d be marketing this crap if they were held to a fiduciary standard?

Do you realize it is virtually impossible for a professional advisor to compare insurance policies from Prudential, Hartford Life, or god forbid, Life of the Southwest (or for that matter, any insurance company)? That is because they won’t disclose what they are charging clients. In my view, more abuse goes on in our industry in the sale of annuity and insurance contracts than in any other product or area.

Right now, a majority of Americans no longer trust our government to do the right thing. They see poor decisions rewarded with bailouts. They see spending beyond one’s means. They see a Federal Reserve Board chairman protecting the banks, instead of letting poor managers fail. They see fewer and fewer Americans with skin in the game. Yet, for some of us, there is still hope. Is it too pollyannish to expect the SEC to do the right thing? I guess we’ll soon see.


Bob Kargenian, CMT
TABR Capital Management