Subject: Standards of Conduct for Investment Advisers and Broker-Dealers
From: Peter Poggi

July 21, 2017

Securities and Exchange Commission,
When investors turn to financial professionals for advice, they expect and deserve advice that’s in their best interests. But some “advisers” who work for broker-dealers are not always required to meet that standard, and some may even be paid in ways that reward them for putting the interests of the firm ahead of the best interests of the customer. Investors lose out on tens of billions of dollars in investment returns each year when these conflicted advisers recommend inferior investment products that pay them more. I urge the Securities and Exchange Commission to adopt new rules, modeled on the Department of Labor’s rule for retirement investment advice, requiring brokers to act in their customers’ best interests and requiring firms to reduce conflicts that undermine that standard. Investors don’t need more boilerplate disclosures, they need real protections from industry practices that put their financial well-being at risk.
This is especially true if an investor is paying a fee for investment management and / or investment advice. But even when no fee is charged, whenever someone is providing investment advice and there is any direct benefit - financial, or otherwise to the person providing the advice, to the firm they work for, or to anyone other then the person receiving the advice, that fact must be fully disclosed.
It should be clear to anyone, that the only motivation in providing investing advice must be the best financial interest of the person receiving that advice - otherwise there is a significant potential for fraud. While it is entirely possible that advice can benefit both the giver and receiver - that circumstance must always be fully disclosed.
Peter Poggi