Subject: File No. S7-25-99
From: Stephen D. Johnson, CFP
Affiliation: President, Johnson Marotta

February 8, 2005

It is time to declare the five-year experiment with fee-based brokerage accounts the failure it is and return to the two-pronged test contained in the Advisers Act itself. The combination of only solely incidental advice with no special compensation worked for more than half a century. Since 1999, investor confusion has increased with each new wave of misleading advertising.

Unfortunately, I fear that the reproposal will only add to the confusion. Having previously defined most special compensation out of the Act, now the Commission is proposing to eliminate for most purposes the solely incidental test as well. The one bright spot is declaring all discretionary accounts to be advisory accounts.

Making clear that brokers, like attorneys or accountants, will not be able to use the solely incidental exemption if they hold out as financial planners is a step, but only one step, in the right direction. Unless the Commission also adopts an approach similar to the Canadian model of restricting the use of all the words that can be used to invoke the idea of financial planning, it will not succeed in reining in the broker-dealers.

Besides, in reality it is brokerage services which are incidental to the practice of financial planning, not the other way around. Financial planning is a profession, while brokerage services are simply a means to the implementation of but one of the subjects of the financial planning process.

Financial planning concerns the delivery of advice, not the delivery of product. Financial planners are fiduciaries, obligated to place the interests of their clients first. Please end the current situation where salespeople who are not obligated to place the interests of their customers first are permitted to masquerade as financial planners.