Subject: File No. 4-606
From: Stephen N Karp
Affiliation: President, Karp Financial Strategies

August 3, 2010

As a financial advisor, I make sure I consider the needs, goals, and circumstances of my client in any recommendation I make or any advice I provide. I take my relationship with my clients very seriously. I hold both a series 7 and series 66 licenses. I peform all necessary continuing education and seek additional education whenever I can. I am examined by my compliance area on an annual basis and each transaction is reviewed for suitability for my client. In advance of any transaction I spend several meetings and many hours working closely with my clients to determine the right plan and products for them. Every case is customized to the need. I pay very close attention to the significant compliance requirements placed on me in supplying all the information necessary to keep my client fully informed.

If I am held to a fiduciary standard in the future, this will limit my ability to help my clients. My practice generally is done without fees. While my level of care would be ths same with a fee as without, my clients don't want to committ to paying upfront fees. I am paid on implementing recommendations based on the client's desire and trust in me. However I may be forced to switch to a fee approach in order to protect myself from liablity. While I always act in the best interest of my client, given the facts as provided at the time, the definition of best in hindsight may be different. If markets don't perform in the future, I am concerned I will be blamed. Also doing the "best" for the client is not a simple asnwer. There are several considerations to determine "best". "Best" can mean least expensive, highest value, highest quality, most predictable, highest potential, highest service, or many other factors. All need to be balanced to the client's needs and goals at the time. The fiduciary standard would allow a lawyer years later to question whether I did the right thing for the client. I believe the present system of evaluating suitability and disclosing information works well for financial advisors like me and most importantly serves my clients in the "best" way.