Subject: Release No. IA-2876; File No. S7-09-09

July 12, 2009

To Whom It May Concern:

This letter is to express my disagreement with proposal File No. S7-09-09. On a fee-only basis, I service middle market Americans, mostly school teachers and government employees. This proposal, if approved, would place an untenable burden on my ability to service these clients. I would have to either pass on the audit cost through higher fees or I would have to eliminate this billing method as an option to my clients (most of whom appreciate having their fees directly debited from their accounts).

My clients’ assets are held at TD Ameritrade Institutional (TDAI), an independent and verifiable custodian. Their books and records are audited on a regular basis. TDAI sets limits as to the amount that may be deducted from client accounts to ensure that my fees are not onerous to the clients. Clients receive quarterly (at a minimum) and sometimes monthly statements which indicate any fees posted to their accounts and they also receive a fee invoice from my firm indicating what the fee deductions are. There are ample opportunities for the client to review and assess the fee without creating additional compliance costs.

As a Certified Financial Planner™ practitioner, I take an ethical oath to act in a fiduciary manner. My firm is a state registered investment that, further, requires a fiduciary standard of care. This proposal is in stark contrast to my oath and obligation, as it is most assuredly not in my clients’ best interests.

While I strongly support the need to strengthen investor protection in light of the Madoff scandal and other Ponzi schemes, I believe the best approach is to give the SEC the resources it needs to audit advisory firms, not outsource that responsibility. I believe that your best course of action is to require that all investment advisors utilize third-parties to custody their assets. Furthermore, requiring all financial advisors to adhere to a fiduciary standard would promote greater investor confidence.

Thank you for allowing me to express my opinion on this very serious matter.


Joe Downs, CFP®
Principal, President
Reality Financial Planning Services, LLC