August 30, 2010
I appreciate the opportunity to comment on the creation of a "fiduciary standard" that would apply to all practioners offering investment advice or products to the American public.
I have been in the insurance and investment business for 30 years. I hold the Series 7, Series 24 and Series 65 registrations as well as insurance licenses in several states.
The "suitability" standard under which my business is regulated currently is quite robust and has a long history of catching bad actors at, generally, an early stage of their actions. This is accomplished by inspecitons and close and frequent supervision under FINRA guidelins. Since I am a sole-proprietor and stand alone practioner most of the compliance work falls on me alone. Continuing Education, conference calls, webinars and an eagle eyed Broker/Dealer Compliance Department keep me up to date on current standards of dealing with customers. I haven't measured the time this all takes but I would estimate several hours per week.
I believe I currently act in the best interests of my customers. There's no way to stay in business under a suitabilty standard if one doesn't so act. What makes suitability work is the ability to be specific about the rules. Disclosures are everywhere in the process. A new fiduciary standard, particularly one that is poorly defined, would lead only to more confusion, increased liability costs and, therfore, increased cost to the investor.
Worse, the likliehood of laswuits based on what is "best" will surely increase. This doens't seem to me the best way to make the markets more effective. I deliver investment products to middle income market folks who badly need the guidance of a trusted advisor. Shouldn't any new standard make that MORE available, not less?
I urge you to consider whether the proposed cure isn't worse than the disease. Suitability works to offer protection for those purchasing invesment products. It effectively regulates the activities of those who sell those products. A new fiduciary standard would restrict the markets, hurt the small businesses, like mine, who act in those markets in the best interest of the American investor. In addition, I believe it would price the average investor out of the market.
Please keep the suitability standard in place. It works.