July 28, 2018
The Honorable Jay Clayton
Chairman
United States Securities & Exchange Commission
Dear Mr. Clayton.
Thank you for your service to the investment community. I know you and many other interested parties have been working on rules that impact the way brokers and advisors are regulated. These changes, as you are keenly aware, will has massive impact for many Americans.
While I respect the work and experience of brokers, I think it is critically important that the general public understands that there is a vast difference between a broker, who may analyze a portfolio of investments and then make a series of product recommendations, to a comprehensive financial advisor who invests many hours understanding all aspects of a client's financial life, and then creating a holistic plan that addresses these area. In my mind, doing all this foundational work, is the best way to make investment recommendations for people with complex and advancing goals, like retirement planning.
It is not unusual for me to spend 10-20 hours working on a client's financial plan before we are ready to implement an investment strategy. When I do make those investment recommendations I'm free to choose from vast array of investments that do not impact the way I'm compensated. Just this week, I met with 12 clients where we met to discuss new strategies. In each of those meetings we spent a considerable amount of time making clear the total cost of investing, which was easy to do since it was transparent. Rarely do clients of brokers know what they really pay.
In my role as an advisor, I've worked diligently to remove conflicts of interest, and do not sell any insurance products, even though I spent a considerable amount of my career in that field. This seems to be the most reasonable way to stay objective and give clients the best planning.
Mr. Clayton, this is not a good-vs.-bad discussion. Rather, it's an apples-an-oranges discussion. Brokers and advisors aren't the same, and it just seems to make more sense that consumers are very clear on that point.
Thanks for your time. Wishing you all the best in your service to our country.
Sincerely,
Derieck Hodges
J. Derieck Hodges, CFPÒ
NAPFA-Registered Financial Advisor
Anchor Pointe Wealth Management, LLC