Subject: File No. S7-25-99
From: Bruce R Wagner

September 20, 2004


September 20, 2004


Jonathan G. Katz
Secretary
Securities and Exchange Commission
450 5th Street, N.W.
Washington, D.C. 20549-0609

Dear Mr. Katz:

I would request the Securities and Exchange Commission withdraw or substantively amend the above-referenced proposed rule entitled Certain Broker-Dealers Deemed Not To Be Investment Advisers the Rule as proposed on November 4, 1999.

Background
The proposed rule would permit a broker-dealer to provide investment advice to customers, regardless of the form of its compensation, provided: i the advice is provided on a non-discretionary basis ii the advice is solely incidental to the brokerage services and iii the broker-dealer discloses to its customers that their accounts are brokerage accounts.

I believe the Rule is detrimental to consumer protection by allowing broker-dealers to avoid the blanket fiduciary protections of the Investment Advisers Act of 1940 Advisers Act. The Rule permits stockbrokers to misrepresent their fundamental sales role as one of a fiduciary adviser receiving a fee for advice. Further, it places financial planners at a competitive disadvantage by allowing brokers to market similar programs under less rigorous regulatory standards for disclosure and advertising.

I do not believe the public appreciates the nuances of the Rule or understands that a brokerage account means the registered representative -- unlike a registered investment adviser -- has no blanket fiduciary duty to place the clients interests first or an affirmative obligation to disclose all material conflicts of interest. Such conflicts may include special financial awards for selling stocks
from inventory known as principal trades or from sales contests. Unlike registered representatives, advisers also must affirmatively disclose any material disciplinary history, as well as their experience and qualifications.

The Rule requires disclosure to new customers that the fee-based programs are brokerage accounts, but not of any conflicts of interest in the
broker-customer relationship. However, the Commission recently has taken aggressive action to disclose conflicts of brokerage firms in securities transactions involving mutual fund shares. Among the most significant disclosure requirements affecting retail brokerage sales are those contained in Point of Sale Disclosure. Requirements for Transactions in Certain Mutual Funds and Other Securities Release No. 33-8358. This rule proposal requires broker-dealers to disclose sales incentives for registered representatives in selling certain mutual fund shares as well as disclosure of financial remuneration from fund companies to broker-dealers in connection with shelf space for mutual fund products.

I believe that the public would be better served by requiring broker-dealers offering fee-based programs to comply with current registration requirements of the Advisers Act and thereby restoring a level playing field for disclosure of conflicts and fiduciary conduct by anyone meeting the definition of investment adviser. Anyone who is in a financial planning engagement should be required to disclose, among other things, his or her conflicts of interest and sources of compensation, and a written statement describing material agency relationships that the planner has with third parties.

Sincerely,

Bruce R. Wagner
Independent Associate
NetWorth Inc.