September 20, 2004
Dear SEC Commissioners:
I am a financial advisor who services my clients through two Registered Investment Advisors - one for fee only financial planning, the other for financial advisor services. I also am Series 7 and Insurance Licensed but this is not the growth part of my practice. We simply look for needs and price shop for our client.
For over 25 years, I have serviced the financial needs of my clients putting their needs first as I believe that is a major way an independent can built a business of higher net worth clientele.
Over that time, I have been able to embrace the concept of acting in a fiduciary role with clients. At the same time, I have had to witness the conflicts brokers have when working for and representing a large financial services firm which promotes in-house investment products or which insists that the loyalty of their brokers be to their bottom line rather than the bottom lines of the consuming public.
Especially over the past ten years, the people once called brokers have been renamed advisers and counselors, words chosen with care, words which do not suggest that there is a sales role or conflicts behind the advice offered to the public. I doubt very much that anybody, either broker or financial advisor does not understand why these firms chose to rename their representatives.
In many cases, the first step in a relationship with a brokerage firm is the creation of a financial plan, with generic recommendations. I have accepted clients who distrusted this generic advice because all the broker or whatever he or she was called seemed more interested in selling product that trying to consider what would be best to meet a need identified in the plan. This financial plan is used to create trust in order to facilitate the sale of products to what we call clients who trust what they are being told. How can this be incidental to the broker-customer relationship?
Some brokers say they are on salary and others say they are compensated by the insurance company so there are not costs to the client. I would submit this is a half truth at best.
ALL I ASK IS THAT I BE ALLOWED TO COMPETE ON EQUAL TERMS WITH Others FROM THE LARGE BROKERAGE FIRMS WHO CURRENTLY TRY TO LOOK LIKE US BUT ARE HELD TO A LESSER STANDARD. JUST LEVEL THE PLAYING FIELD. In my opinion, THOSE LARGE FIRMS ARE ASKING YOU to allow them to evade fiduciary responsibilities so their renamed consultants and advisers can pose as equally-trustworthy providers of advice.
I respecfully hope, you can see through their smoke screen and approve a level playing field for all.