Subject: File No. S7-09-09
From: John J Hutchins, M.S., CFP, AIF

July 2, 2009

RE: File Number S7-09-09

Clients of most Registered Investment Advisors custody their assets with an unaffiliated third-party brokerage firm or trust company. Advisory fee deductions are requested by the RIA from client accounts, and the third-party custodian monitors and places limitations (typically a maximum 2% of account value) on these fee deductions before performing them. They then report these fee deductions on monthly statements that are delivered by them directly to their clients.

This process strictly limits the RIA's access to any client funds, provides tight oversight by a third party, and ensures timely notification to the client.

RIA's who use their own affiliated broker-dealer are already subjected to surprise audits by an independent CPA.

The proposed costly burden will not make client money any safer. It will, however, adversely impact small independent RIAs by substantially increasing their cost of doing business. These are the very practitioners who offer individuals the lowest cost and most highly personalized financial advice.

Consequently, the proposed rule change will act to the detriment rather than benefit of consumers.

RIA's are already heavily regulated. Indeed, compliance with existing regulations is very expensive and time consuming for the small entrepreneur advisor. Adding additional and unnecessary regulatory burdens will ultimately serve only to reduce competition and force consumers to turn to the large broker-dealer firms where 98% of all disciplinary actions are initiated -- and which are regulated by FINRA, who failed to adequately monitor Madoff's affiliated broker-dealer firm (it was his broker-dealer firm and not his RIA firm who actually defrauded investors by generating false account statements and he was, in fact, audited by an independent CPA firm).