Subject: File No. S7-25-99
From: James D Schwartz
Affiliation: NAPFA, CFP Board of Standards

January 31, 2005

As many have already commented, the proposed ruling is hazy. The definition of what constitutes financial planning as a service versus the planning being incidental to providing brokerage services is the concern.

Heres a quick and simple solution to all of this: require completion and delivery of a full disclosure form to every prospect and client. Whether the advisor is a registered representative, registered investment advisor, or other form of advisor, if they have anything to do with investments they should be informing the prospect or client about the potential issues, such as taxes, estate planning, cash flow, and risk management, that may exist for the specific concern the consumer has come to the advisor to address. If the advisor cant address these issues in a competent fashion, the consumer should have some way of knowing this, and the advisor should be required to let the consumer know who they need to see to address those issues. To make this whole thing work, the advisor should be required, by the SEC and all State securities divisions, to use a preapproved form, such as NAPFA has for interviewing a financial advisor, to disclose their background, education, experience, fee structure and how many dollars they are going to get compensated if the consumer follows through with the recommendations and type of service they will provide. If the advisor is a broker, its ok. We need good brokers. The consumer should know they are a broker and know what level of service to expect. But the consumer might also need a financial planner, retirement specialist, eldercare specialist, or divorce specialist, and so on. If we all just disclosed what we CAN and CANNOT do, an educated consumer should end up getting better service with less chance of things blowing up. Full disclosure does a lot toward informing the consumer and empowering them to make wiser decisions. Full disclosure allows the consumer to get a much better understanding of the capabilities and conflicts of the advisor. Why should everyone in the financial services industry feel like they can offer every kind of service and do it competently? Lets put a tool in place that all advisors are required to use which provides the consumer with a wealth of information that reflects their specific situation. The consumer should be able to meet anyone of us and walk out the door knowing exactly what they are going to be charged, what we as an advisor have done and are doing to build and maintain our professional capabilities, and exactly what amount of planning, or lack thereof, is provided if they choose to hire us. I suggest you speak to Ellen Turf, CEO, NAPFA, regarding the Financial Advisor Interview form. In the meantime, rescind the currently proposed ruling until such time a solution exists that protects all consumers, no matter who they get their advice from.


James D. Schwartz
Desert Valley Financial Planning