August 23, 2004
Attn: Jonathan G. Katz, Secretary
Securities and Exchange Comission
Re: Proposed Rule titled Certain Broker-Dealers Deemed Not to be Investment Advisors Rule, dated Nov. 4, 1999.
As a member of the Financial Planning Association and a Certified Financial PlannerTM, I strongy urge the SEC to withdraw the above referenced rule. In my opinion, and that of the FPA, the rule is vague and fails to provide clear regulatory guidance, specifically as it relates to solely incidental advice provided under the proposed rule. The same holds true regarding the failure to provide a clear distinction between full-service brokerage and financial planning services.
Many broker-dealers are marketing their services as investment advisory in nature, as well as their financial planning services. Many, in fact, call themselves financial counselors, investment counselors, and use related titles. Each is misleading to the public absent the appropriate disclosures of compensation, certifications, and conflicts of interest.
The recent abuses of mutual fund trading, IPO allocations, and other actions that resulted in fines of hundreds of millions of dollars has substantially eroded the publics confidence in broker-dealers. The most recent report by the Spectrum Group underscores the publics concerns in this area.
The public is in fact being provided investment advice within many of the the WRAP and Separate Account Manager programs, as well a the in the day-to-day activity of brokers.
I, together with fellow FPA members and fellow CFPRs, believe that the public would be better served with a requirement that broker-dealers offering fee-based programs comply with current registration requirements of the Advisors Act, providing the public with a level field for for anyone meeting the definition of investment advisor.
Mark V. Kenny
Glencrest Investment Advisors, Inc.