Subject: IA-BD-Conduct-Standards
From: Scott Wallschlaeger

June 22, 2017

To whom it may concern,
Although I agree with the premise of having a fiduciary standard for all people in the financial industry, I have great concern about the process, documentation requirements, and firm requirements to implement the proposed rules.  Over the last few years, due to other regulations (ex. Dodd Frank) we have increased our costs of compliance by over 100% from previous levels and I'm afraid that will happen again with this rule.  These increased costs of compliance are staff time to track rules and comply, attorney costs to redrafting documents and agreements, hiring compliance consultants, etc. As a small registered investment advisor firm ($200 million AUM), these costs are becoming a significant burden on our business and are forcing us to limit new hires (which we need desperately).  This is also leading to our costs going up, therefore our cost to clients going up.  I worry that this rule will continue to increase costs going forward and will leave us no choice but to further increase our minimum investment size (which would limit access to our services),  limit the service(s) we provide (less meetings, less service), or added fees.  These all seem counter to what should be happening.  We know that when we get involved with clients early we make significant improvements in their ability to save and prepare for life events.  More regulation and cost to us will likely delay or eliminate access to these services for more people in a time when people need more help than ever because things are so complex. 

All we are doing with all this added disclosure is making people tune out even more.  We used to provide clients with an easy to understand ADV that described what we did and how we charged.  The document was about 16 pages and most clients read and understood this document.  I know this because people would ask questions about what they read in this document.  Now because of "Plain talk" regulations and other Dodd Frank rules these document are over 50 and expanding.  We now know that most client likely never read the document and people have asked if they could just throw it away before they leave.  This is not a good sign.  This will only get worse with DOL's proposed rules and I fear it will leave people even more uninformed.  By making a client sign a disclosure or get a disclosure will not eliminate the bad apples since I expect most people/clients really don’t read or understand this stuff anyways. 

The idea is great, but the execution is poor in my opinion.  Hold advisors to a fiduciary standard.  Make them pay (fines, etc) when they don't do the right thing, but don't punish firms who do the right thing  and have proven themselves to be compliant without the regulations.  Make the regulations only for firms who have been found to have issues and give them a chance to fix the issues and eliminate the added scrutiny over time.  Not all advisors and firms are bad, so I think we should stop treating them all like they are untrustworthy and give them the benefit of the doubt until proven otherwise.

I truly hope you give strong consideration to modifying these proposed rules to make them less of a burden on firms like ours who work hard every day to do right by our clients and always act in their best interest.



Scott Wallschlaeger, CFP® CRPS®
Midwest Professional Planners, Ltd.
202 3rd Ave.
Proctor, MN 55810
Phone (218)628-3135
Fax (218)628-3133