August 7, 2018
Hello, re: File Number S&-07-18, the following comments are from Partner, Clay Esplin:
1. Agree to the SEC continuing education as long as it doesn't become arduous. If SEC is requiring continuing education they should supersede state requirements so that an adviser does not have to duplicate continuing education. All advisory personnel who solicit trades should be included in this (possibly require more for those that have had regulatory issues). I am against a requirement for designations such as CFP etc. Good advisers will be good, bad will be bad. Bad apples and competency can be weeded out through testing, continuing education and disciplinary action. The most important regulatory topic should be ethics and having the advisor agree to that and be able to support their recommendations. I would agree to the minimum experience requirement. I'm not sure how you gauge fitness as an investment advisor.
2. Retail investors already receive statements monthly--I do not believe they need more statements. All of our statements through Schwab, TD Ameritrade and Orion show advisory fees charged. There is also a year end summary which includes these charges. I believe that rather than receive statements from advisors, the custodian should provide a simple summary report on page one of their statement including fees, YTD and one year returns - Most of our clients complain that Custodian statements (TD, Schwab etc.) are too difficult to read. Clients want simplicity on their statements. A one page summary with beginning value, ending value, returns for the quarter and or YTD would be very helpful, This could also include all fees so that the return is net of fees. Clients should receive statements at least quarterly but have the option to request statements more often if they would like (monthly). We purchase a system (Orion) to generate statements. The cost for our firm is approx $60,000 per year. I believe that this is a substantial investment for many firms. The custodian could provide this information at scale better than individual RIA's
3. SEC RIA advisors should not be required to be subject to the same requirements as BD's
No to minimum capital requirements. If fraud is a widespread problem then a fidelity Bond would be prudent. Annual audits should be required only if fraud is a widespread problem
Two other notes: with regard to the fiduciary responsibility proposals. Its important to realize that protections need to be considered on both sides of the RIA/client relationship. Advisors need to be held accountable for fraud, theft and other serious crimes. An area of concern on the other side are frivolous claims against good advisors that are working hard in the clients best interest. Advisors, their clients and staff and businesses need to be protected from frivolous claims by clients, class action attorneys and others.
I have always been a believer in business and family that I should never ask anyone to anything that I myself am not willing to do. Both advisors and the SEC should be held to a high standard of conduct. Rules and penalties should be equal for both advisors and regulators as it keeps the playing field even for all.
Thank you
Clay Esplin
(sent by Elizabeth Gray)