Subject: File No. S7-25-99
From: Ronald S Pearson, CFP
Affiliation: Owner, Beach Financial Advisory Service

February 6, 2005

I believe the proposed regulations should be withdrawn because they are fatally flawed.

As you correctly stated in your background, customers are better off with a fee-based advisory service than a straight brokerage account less churning for commissions, etc. However, the REASON customers are clamoring for asset management services, financial planning service, etc. is that they think their BEST INTERESTS are being served helped by very slick marketing by wirehouses. They have no clue of the difference between a fiduciary standard and a suitability standard.

Your disclosure requirement will not meet the publics need for education. The only way to resolve the dilemma of two different entities providing the same services one a fiduciary, one only meeting the suitability standard, is to make both providers BE FIDUCIARIES. There is a reason for a lower regulatory environment for fiduciaries, the much higher standard of care for customers significantly reduces customer complaints. Your guiding principle should be what is best for the customers, not the wirehouses. With all the recent evidence of rampant conflicts-of-interest in the financial services industry, you need to put the SEC firmly on the side of the customer.

One way to do that is not requiring registered reps to also register as Advisors. You could simply require the NASD to regulate as a fiduciary any registered rep holding out as a financial consultant, financial advisor, etc. or providing asset management services. Then, the rep would not be required to register with two entities and the rep would be regulated based upon what they did, not based upon who their regulator was. All customers receiving the same service would know that their provider was required to meet the same standard suitable or fiduciary. No need for bright line definitions. Services could not be incidental if they were advertised or if the rep held themselves out as a financial consultant or financial advisor.