August 6, 2018
Dear SEC:
I am writing to comment on the SEC’s recent proposals to enact a new Regulation Best Interest standard of conduct for broker-dealers, the new Form CRS Relationship Summary, and the proposals for Enhanced Investment Adviser Regulation.
The Commission’s intended goals of the proposals, to enhance investor protection and industry transparency, while preserving choice for retail investors, is laudable and to be commended.
However, I have significant concerns with the following key points:
• The introduction of a new “Regulation Best Interest” standard
o As written this would allow broker-dealers to say they act in the “best interests” of their clients, without actually being subject to a full fiduciary duty to require it.
• A Form CRS disclosure that is supposed to explain the relationship between advisors and brokers
o As written it uses confusing language that blurs (instead of highlights) the distinction between who can and should legally give advice, versus who is compensated for the sale of a product.
• Allowing hybrid broker-dealers to state that they are “financial advisors” without any requirement to disclose when they STOP wearing their advisor hat and switch into a sales role
• A potential new requirement that would require independent RIAs to have national continuing education requirements, and potential capital requirements in order to start or maintain an RIA
o Advisors who are already required to complete numerous hours of continuing education by organizations such as the CFP® Board and NAPFA should be exempt from additional national requirements.
o Any potential capital requirements should be risk-based, and proper errors & omissions insurance should supplant this requirement.
Sincerely,
Ben Brown