Subject: File No. S7-09-09
From: Jeffrey M Garell, CFP
Affiliation: Silversage Advisors

July 28, 2009

July 27, 2009

Ms. Elizabeth M. Murphy
United States Securities and Exchange Commission
100 F. Street, NE
Washington, DC 20549-1090

RE: Proposed Amendments to Rule 206(4)-2
Release No. IA-2876
File No. S7-09-09

Dear Ms. Murphy:

Both my partner and I are members of the Financial Planning Association and are Certified Financial PlannerTM professionals. Our firm, Silversage Advisors, appreciates the opportunity to express its views in response to the Securities and Exchange Commissions request for comments on the proposed amendments to Rule 206(4)-2.

As an investment adviser registered with the SEC, we would be considered to have custody solely because we have the authority to deduct advisory fees from our clients accounts, all of which are maintained by an independent, qualified custodian. We are strongly opposed to the proposed requirement subjecting investment advisers to an annual surprise audit by an accounting firm.

Further, it is my personal belief the proposed amendment is simply a misguided attempt to address the Madoff Ponzi and other recently discovered schemes. I understand that certain accounting firms were not registered with the Public Company Accounting Oversight Board, the primary SEC custody rule loophole allowing Madoff to avoid detection of his phony auditing. This has nothing to do with the deduction of advisory fees from client accounts. Why burden advisory firms with additional regulation and cost when the SEC clearly failed in its oversight and auditing process of Madoff and others? I also understand this loophole has now been closed.

Our custodian delivers monthly account statements directly to our clients. Custodian statements identify the amount of funds and securities at the end of the period as well as all account activity. Our clients also agree, in writing, that our advisory fees will be deducted directly from their advisory accounts. Our firm further provides each client with a Statement of Fees to review fee calculation and to compare the amount versus the statement from the independent custodian.

According to the Commission, the surprise examination focuses on verification of client funds and securities, costing an average of $8,100 annually. This expense is completely unjustified where independent qualified custodians hold client assets.

If the proposed amendments are made, we would be forced to either eliminate the direct debit of fees (requiring clients to pay our advisory fees directly, which is a cumbersome process and not in line with present widely accepted client and business standards) or pass on the additional auditing cost to clients in the form of higher fees. More importantly, our resources will be shifted from helping them with their financial planning and investment needs to focusing on bill collections.

Given that the existing safeguards in place are adequate for firms such as ours, and considering the adverse effects of a mandatory surprise audit on Silversage Advisors as well as our clients, we respectfully request that the SEC leave current Rule 206(4)-2 intact and unchanged with respect to advisors who have custody solely because they have the authority to deduct advisory fees from client accounts.

Our firm recommends and supports authorizing the SEC having the resources to enforce existing regulations and to increase the frequency of a reasonable audit schedule.

Jeffrey M. Garell, CFP
Silversage Advisors