Subject: File No. 4-626
From: James Toler
Affiliation: President, JST Financial Corp.

April 21, 2011

SEC: 4/21/2011

Request For Comments: Investor Education
Dodd Frank Act, Section 917

After 19+ years in the financial planning business with both insurance and Series Six licenses I agree that investors need more education.

The main problem is who is going to give it to them? A fortunate few realize that many of todays products and services are too complex for the do-it-yourself approach and they turn to financial pros like me. The rest are at the mercy of their own laziness, denial, or stupidity. A lot could be resolved by adopting the motto:

If you do not understand how it works, dont buy it.

How about that for the centerpiece in an ad campaign? Short, sweet, and to the point. You could even sell Tee shirts with the picture of a broke guy on it, standing there with his pockets turned out showing he had no money, and a sad look on his unshaven face, maybe a tear or twotoo much?

Since a very small percentage of the public gets any formal financial education during their school years they either have to self-educate, or rely on family, friends, or enlightened co-workers, and untrained bank tellers and vice presidents (since everyone at the bank is either a teller or a VP). Every week I run into someone who went to their Bank and the idiot there let them put their kids name on all of moms accounts with no mention of the Tax and liability problems that creates, not to mention the potential for MEDICAID disqualification for Mom. The Bankers ignorance causes financial elder abuse, and thats a fact.

Nowadays TV stations like CNBC and Bloomberg provide a very dangerous and mixed educational message every hour on the hour since they do not make any attempt to differentiate whether their message is aimed at investors or traders.

Unfortunately the general public does not know or understand the difference between those terms and simply thinks that all those ideas, stock tips and strategies are good for them too. How many people are really suited for some of hedge-fund-hotshot Jim Cramers ideas I wonder?

If you want to start reforming financial education in America target the financial TV stations. I teach my clients not to get their financial information from a pretty talking-head journalism major, with a big smile wearing a low cut blouse. Her credentials may be attractive on a barstool at 11 pm but where is her due diligence, risk assessment and suitability, and fiduciary responsibility? Any conflict of interest with her advertisers? Is her compliance department previewing every word and statement she makes to the public, like mine does if I want to hold a seminar with 25 people? After all her seminar/message reaches millions. Were all her graphs and charts pre-approved for use with the public? Can I get a copy of the FINRA letter authorizing their suitability and use? If not why not? (Ill wait. I really would like the answer to that question).

About 30 years ago a TV show named This Old House debuted and people have been self-educating themselves about how to remodel a home in one hour since then. Thanks to the misunderstood messages the public received from Bob Vila and Norm Abrams real professional carpenters, plumbers, electricians and many Para-medics and firemen have seen a dramatic increase in their business fixing the messes made by the do-it-yourself home improvement public.

What is DODD-FRANK doing to educate the house flippers that go bankrupt looking for a one-week profit of $60,000 by flipping a house? How many homes are in foreclosure today, and during the housing crash, because of a TV show where someone said they made big bucks flipping a house? Most of those people quickly find they are in over their heads, they dont have the knowledge, skills or experience to do the job, and they end up losing their shirt. (Gee whiz, knowledge, skill, and experience.. it sounds like a pro is needed to me).

The government and the SEC and FINRA are quick regulate and to worry about whether or not a $2,000 mutual fund investment I may recommend is appropriate, suitable, and correct, yet a banker or mortgage company can encourage someone to borrow 125% of their homes value so they can play house flipper and go bankrupt. People leveraged their personal residence to buy a property to flip, and ended up losing both.

Frankly I think this is another case of the government saying: Ready, fire, aim. Thanks to DODD-FRANK the wrong people will be targeted as the problem again.

Financial education from family members is incomplete and dangerous at best. They can only pass on what they learned from their parents or other financial hearsay and stock tips they picked up from their barber, or their beautician. Friends and co-workers are well intentioned but they too have no idea about what may, or may, not be suitable and appropriate for another investor since they probably do not know what is even suitable for themselves. A co-workers hearsay opinion about investments, financial plans, and stock tips does not take into account any form of risk analysis or suitability scrutiny. At best it should be characterized as reckless. Financial professionals recognize there is no such thing as one-size-fits-all planning.

Examine the root causes of irrational exuberance and the run up in unrealistic stock market values before the dotcom crash. Investors and traders were tripping over each other to buy anything with dotcom in the name because thats what they were told was a good investment by the TV set, their Uncle Joe, or the cute looking guy in the next cubical at work. Never mind that many of those high-flying companies had no earnings or tangible assets. The only thing propping them up was the law of supply and demand. Too much money chasing too few shares of stock. Irrational Exuberance. We all know how that ended.

Do we want to talk about the short-lived day trader phenomenon? Do it yourself addicted gamblers that ended up divorced, broke, bankrupt, suicidal or murderous, not to mention all of the income tax problems they created for themselves. If any group could have used professional help it was those people (help on many levels actually).

It is too bad the SEC and FINRA and the government cant just put a big plastic bubble around everyone to protect them from harm. But here in America everyone has the right to be an idiot if they want to.

Your inquiry into how best educate the public in financial matters is laudable and theoretically correct. The only problem is that it means another set of rules and regulations will be created and enforced against the wrong group of people the properly licensed, trained, and supervised professionals like me. Someone who has been trained and educated about how todays products work and where to use them. We already have on going continuing education to meet licensing requirements. We undergo mandatory product education before we are allowed to sell certain products. We are held accountable through daily supervision and case by case suitability reviews when we submit new business. We have better and faster access to market information, facts, history, and trends. We do this stuff for a living. It is a fulltime job keeping up with new products and developments.

Instead of helping the consumer DODD-FRANK will again result in an over reaction and do more harm than good. Don't shoot the messenger again. Those of us in the business of providing real, accurate, verifiable, and suitable facts about financial products, services and strategies will again be punished and proselytized while Maria Bartiromo bats her eyelashes and smiles at you. Just teach people this:

If you do not understand how it works, don't buy it.

PS: Not Suzie Orman either, she doesn't even know how life insurance or an annuity works.