Subject: File No. S7-25-99
From: Alix-Marie Hall, MBA, CFP

August 26, 2004

Comment on File No. S7-25-99
SEC Broker-Dealer Rule Exemption

I urge the SEC to WITHDRAW this rule proposal.

I strongly believe that - by creating two different standards of conduct for persons purporting to offer financial planning services-- this rule is harmful to consumers. It is a FACT that consumers are typically unable to distinguish between one type of "planner" and another. Accordingly, it makes no sense to set a higher fiduciary standard for registered investment advisers and a lower one for brokers under NASD suitability rules.

The net effect of the Broker-Dealer Rule Exemption is that BROKERS NEED NOT DISCLOSE CONFLICTS OF INTEREST in connection with financial planning services they offer. Based on the serious problems I've seen, consumers tend to trust people who may have a winning personality and great selling skills BUT who do NOT "put their clients first." EXAMPLES:

  • Client statements from one of the largest wire houses bear a striking resemblance to one another-regardless of the client's age, financial position, needs and objectives, and brokerage account tax status.
  • Clients NOT eligible for "accredited investor" status were presented risky "tax shelters" that the unwitting investors were compelled to continue funneling money into for several years under an installment program, after they had been victims of RIF programs.
  • Clients were asked in their mid-50s on separating from their employers to roll over 100% of their 401(k) accumulations into technology sector funds.

These are just a few examples of the "financial planning work" I've seen from some of the largest brokerage firms. Does it really make sense to allow brokers who may be given quotas, bonuses or other monetary awards, trips, and other prizes to present their recommendations as "objective"?

OR would the industry like to get past the issues of corporate governance, consumer skepticism, and investor fear -- in favor of fair and full disclosure AND the opportunity to rebuild consumer trust and encourage appropriate investor decision-making?

Thanks for giving me the opportunity to comment.

Alix-Marie Hall, MBA, CFP -- Independent Financial Advisor
@ Sanders Smith Miller & Jordan
120 White Plains Road
Tarrytown, NY 10591
Ph: 914.524.9800 x234