Subject: S7-28-97 January 20, 1998 Mr. Jonathan G. Katz Secretary Securities & Exchange Commission 450 5th Street, NW, Stop 6-9 Washington, DC 20549 Re: [Release No. IA-1681, File No. S7-28-97] Proposed rules to amend rule 203-A [17 CFR 275.203 A-2], rule 203 A-3 [17 CFR 275.203 A-3], rule 206(4)-3 [17 CFR 275.206(4)-3] and Schedule I to Form ADV [17 CFR 279.1] under the Investment Advisers Act of 1940 [15 U.S.C. 80b-1 et seq.] ("Advisers Act"). Dear Mr. Katz: The International Association for Financial Planning (IAFP) is pleased to provide these comments on the proposed amendments to rules implementing the Advisers Act. IAFP is the oldest and largest membership association serving financial planning. Our over 17,000 members are guided by the principle that everyone needs objective advice to make smart financial decisions. IAFP advances the financial planning process as the foundation for making good financial decisions. The financial planning process is client-centered rather than product-centered, and includes an analysis of the client's current situation; determination of the client's needs, goals and objectives; formulation of a written plan of action, and implementation and ongoing review of that plan. The Commission staff has done an excellent job of addressing issues that have arisen since it adopted rules related to the Advisers Act. IAFP generally supports the proposed rules; however, we submit the following comments for consideration: * Multi-State Investment Adviser Exemption from Prohibition on Registration with the Commission - We agree with the Commission's decision to exempt investment advisers whose business is national in scope yet less than $25 million in assets under management from the prohibition on registration with the Commission . However, we feel the Commission should consider lowering from 30 to 25 the number of states in which advisers would be required to register in order to receive the exemption from prohibition on registration with the Commission. An investment adviser doing business in a majority of the states (25 or more) would be considered a national firm by most consumers and other financial services firms. Registration with the Commission would ease confusion by consumers, ensure Commission jurisdiction over a "national firm," and be more economical and efficient for the investment advisers that would be required to register in 25 or more states. * Five State Difference - IAFP supports the inclusion of a five state variance for continued eligibility from the exemption. The Commission is correct in its attempts to avoid transient registration problems that would occur due to fluctuations in the market or in client composition in any particular state. * Proof of Counsel Review - IAFP strongly opposes the requirement for an investment adviser to represent that counsel has reviewed applicable state and federal laws and has concluded the investment adviser qualifies for the exemption. Currently, investment advisers are able to ascertain their status and in large part, register with the appropriate securities authorities. There has been no charge or evidence that the current registration process is too complicated for investment advisers to determine under which regulatory body they should register. The requirement for counsel review would be expensive and create burdensome and unnecessary work for the investment adviser and the Commission. Therefore, IAFP feels there is no need for a change in the current policy. * Prohibition on Newly formed Investment Advisers from Using The Multi-State Exemption in Conjunction with the Reasonable Expectation Exemption - IAFP believes the Commission should allow investment advisers to use both exemptions if it reasonably expects it may reach either qualification for exemption within 120 days. An investment adviser may expect to reach both qualifications but one before the other and simply not be certain which one it will reach first. * Determining the Value of Assets Under Management - IAFP supports the proposal that will clarify the way in which investment advisers are to calculate their assets under management for Instruction 7 to Schedule I. Allowing investment advisers to use market values of the portfolios for which they provide supervisory services as determined within 90 days prior to filing will provide a more accurate determination of true assets under management. This will benefit consumers and provide helpful clarification for IAFP members. IAFP is pleased to provide these comments. If the Commission needs more information, please feel free to contact us. Respectfully submitted, Dale E. Brown, CAE Associate Executive Director International Association for Financial Planning 5775 Glenridge Drive, NE, Suite B-300 Atlanta, GA 30328-5364 Phone: (404) 845-0011, x7764 Fax: (404) 845-3660 E-mail: daleb@iafp.org