Subject: File No. 4-606
From: James R Johnson

August 2, 2010

I hold the CFP, CLU, ChFC designations and am as well life and health licensed and FINRA Series 7 registered in Indiana. Currently my designations and insurance license have rigorous continuing education requirements and I am subject to my broker dealer compliance for my transactions in terms of suitability. My DSP examines every transaction and my broker dealer confirms. I am examined yearly and have two mandatory education elements focusing on concerns identified by FINRA.

As each transaction is supervised by my Principal I am required to provide extensive paperwork demonstrating suitability and thorough discussion with clients. The paperwork is extensive and the cost of adhering to the rules is substantial. Staff must review all paperwork prior to being sent to the DSP and then and only then do transactions go forward. I believe that the current rules for supervision are excessively burdensome in some ways and do nothing to help my customers. Regardless, I adhere to the rules because they are the rules. My clients suffer as my workload in complying takes time away from my work with them.

The adding of a fiduciary duty to my work will add costs which may result in my retiring (I am age 58) or slowing down substantially. I have significant experience to share with young advisors and my early retirement will deny them the opportunity to learn more about our profession. The fiduciary duty also serves to forward an agenda of a special interest group desiring to take over as the "guardian of public interest". Nothing could be further from the truth. This group, The CFP Board of Standards, has made it clear in the last three plus years that they want to be the drafters of bills and regs that support their agenda. They seek to require membership in their organization if an advisor's voice is to be heard. I am a CFP Certificant. I am unalterably opposed to the position of the organization and am particularly disappointed at the political intrigue. Membership in the organization is on the decline. This standard will likely result in a surge and temporary increase in membership (and revenue to them). They have proven over the years that they could only grow membership by adopting members of NAIFA and The Society of FSP. It is these two organizations that focus on bringing new members to the trade. As the Board of Standards has failed to do this (grow members organically) enacting any standard which increases the power of this special interest group will result in a decline in new persons entering the business. Ultimately this will result in failure of the profession to serve the public. Fewer and fewer average Americans will have access to planning advise because of the increased costs.

I teach the CFP/ChFC ethics course across Indiana. I have instructed hundreds of advisors in this course. I find no correlation with the fee-only model being used and a better end product (unbiased advice)for the consumer. Fee-only advisors are just as capable of doing the public harm as are commissioned advisors. They are able to hide behind a false proposition that their model assures objectivity. I find in reality that fee-only advisors can easily concoct procedures to justify their fees vs charging what really ought to be due. This creativity is cloaked in their pledge of objectivity. It is a false choice. It is the ethical and moral bearing of the man that determines whether or not objectivity is exercised. A clever advisor can just as easily fool a regulator in justifying fees as they can in spinning a web to justify a churn of an account. The claim that a fiduciary standard will change the man is absurd, rather it will allow the particularly clever and dishonest individuals to hide within the complexity of the regs.

The average American will find it very difficult to pay up front fees. Commission methods of compensating advisors allow the "fees" to be amortized over time which helps average consumers. It is also a fact that particular product sale commissions are far less expensive than ongoing fees clients will be required to pay. As fees from average Americans cannot be paid, fewer and fewer will be served and more and more will have to depend upon the government for their financial support.

My expenses will rise. My errors and omissions insurance cost will skyrocket due to the litigation costs that will surface when it is understood by the legal profession that any decline in the equities represents an opportunity for suit.(In 35 years I have never had a lawsuit and never a complaint). Seasoned professionals like myself will leave the trade to retirement rather than deal with the mess. Average Americans will either not be able to afford up front fees or they will not be willing to pay them. Financial advisors will increasingly focus on the wealthy and abandon the middle class. This is simply reality.

Finally, the Life Insurance industry will be required to supervise this standard. You may be certain that many company execs will see the burden as too onerous and surrender to acquisition. Fewer and fewer carriers will dot the landscape denying America the ingenuity that comes with diversity in the marketplace. Our industry is a mature industry and as such is not able to grow as margins have thinned. Much of that has been as a direct result of the adding of regulatory burdens during the last 3 decades. Except for the powerful 20 or 30, the industry is facing extinction in the next 25 years. Hundreds of thousands of jobs will be lost. Pension benefits will be jeopardized. Philanthropy from the coffers of domestic life companies in our communities will be decimated. Just yesterday I was at the Cincinnati Reds park named Great American Ball Park. Please take some time to examine the financials and distribution system of this company (Great American). It will not be possible for them to implement a fiduciary standard in that distribution system without mammoth costs. Something must give. The costs will be extracted from our community.

Yes, all this follows from the fiduciary standard. It represents the end of new advisors. It represents the end of the life insurance industry as we know it as it will be unable to accept the costs of growing new distribution (advisors). It ends access to average Americans of the skill of financial advisors and makes that wisdom only available to the wealthy. All this is in the balance for an idea that will not work. It is the ethical and moral bearing of a man that determines objectivity. A fiduciary standard will not change the man and it will not snare the dishonest.

Please, do not allow this special interest group to accelerate the end of professional financial advice Surely it sounds very good. But it is not.