Subject: File No. 4-606
From: Chris Cousins, ChFC

August 7, 2010

As a dually registered advisor, we are subject to the regulations as an Investment Advisor as well as subject to audits and scrutiny by FINRA at the broker dealer level. Imposing another level of regulation by using the fiduciary standard on all financial professionals, though sounding like it will protect consumers, actually will do the opposite.

Imposing this standard on registered representatives will do nothing additional to protect consumers, in fact there are advisors that hold out to being fiduciaries that give bad financial advice. Suzy Orman is probably the best example. Her "avoid commission at all cost" approach to financial planning results in seriously flawed financial strategies. Yet because she holds herself out to be a fee only advisor, her advice is assumed to be useful and protective of consumers. It is not and this can easily be verified.

Granted, as long as the representative or insurance agent gets paid a commission, there is a potential conflict of interest. The method of compensation doesn't cause bad advice, any more than a handgun shoots someone. It is the dishonest or possibly incompetent advisor causes bad advice. The key is disclosure, education and training standards, and even better licensing standards. Imposing some standard that cannot possibly be enforced is not the way to solve the problem.

Furthermore, making the assumption that if conflicts of interest are removed, the consumer is protected from bad advice. Again, not true.

Therefore, the key to protecting consumers is disclosure of all potential conflicts of interest. There is already so much regulation on the books, but the conflict of interest area could be improved by requiring all financial professionals to disclose and confirm with the clients that they are NOT acting as a fiduciary. The insurance industry could possibly do more to disclose how much commission agents are receiving on a sale if this would be useful.

Either way, maybe this would allow consumers to have more information and therefore make better decisions.