From: Michael Udoff [mailto:MUdoff@sia.com] Sent: Thursday, March 27, 2003 4:00 PM To: royep@SEC.GOV Cc: eileen.ryan@csfb.com; FornelliC@SEC.GOV; PlazeR@SEC.GOV Subject: Follow-up regarding broker-dealer rule Dear Paul, Wanted to thank you, Cindy and Bob for attending our Investment Adviser Committee meeting last week. The discussion was very helpful and animated. I also wanted to get back to you regarding some issues related to the broker-dealer rule proposal on which you requested input. Discretion--While the release poses the question as to whether all discretionary accounts should be treated as advisory, we believe the motivation for proposing the rule was to clarify that fee-based compensation alone would not change the fundamental character of the services being rendered. We firmly believe that the granting of trading authority (regardless of the form of compensation), outside of a formalized advisory program is generally done as a convenience to the client, even where the parameters exceed mere time and price discretion. These arrangements do not entail periodic portfolio reviews, re-balancing, the services of a money manager, or other ancillary services normally associated with advisory programs. Furthermore, despite the existence of discretionary authority, many client investments may be self-directed. Where additional advisory type services are provided, such as in the case of internally or externally managed wrap, or similar programs, compensation is normally fee based, and the accounts are treated as advisory in nature. Financial Planning--Financial planning is not an "advisory service," but rather an important tool for meeting know your customer/suitability requirements for both brokerage and advisory accounts. The nature of the relationship is ultimately dependent on how the results of the financial planning analysis are implemented, e.g.--does the client enter into a portfolio management program, or rather make investment decisions on his/her own in consultation with the broker? If financial planning, in and of itself, were deemed to be an advisory service, there would be no such thing as a brokerage account. We appreciate the opportunity to offer our views. Look forward to seeing you at the ICI Conference. Regards, Mike Udoff