August 7, 2018
Hello, re: File Number S&-07-18, the following comments are from our Licensed Paraplanner, Lauren Dalton:
Should there be federal licensing and continuing education requirements for personnel of SEC-registered investment advisors? Specific Questions to answer:
· Which advisory personnel should be included in these requirements? Admin, those that work with paperwork, answer phones, etc. Back Office personnel, Advisor's assistants, paraplanners, compliance, etc.
· How many hours of education should be required? I think everyone in a financial office would benefit with continuing education annually. Depending on the position and how closely they are working with clients, meeting preparation, paperwork process, and SEC rulings, the amount of hours can be different or the level of depth could vary as well. 1-3 hours maximum
· Should these individuals be required to pass examinations, such as the Series 65 Examrequired by most states, or to hold certain designations, as a part of any registrationrequirement? Definitely not, there should be positions available to those who are not interested in studying for grueling licensing exams, and it is important for business continuity that new hires can be made quickly
· If continuing education requirements are a part of any licensing requirements, shouldspecific topics be required? For example, these individuals could be required to complete acertain amount of training dedicated to ethics, regulatory requirements or the firm’s complianceprogram. Yes, if it is applicable to their job, then re-visiting various education topics would be a good idea
· What other types of qualification requirements should be considered, such as minimumexperience requirements or standards regarding an individual’s fitness for serving as aninvestment advisor representative? None, I think being flexible on qualifications would provide less barriers to entry for the industry, and would help businesses by being able to hire people from different backgrounds and can teach them on the job. The best person for the job may not always have a financial background
2. Provision of account Statements
Should we propose rules to require registered investment advisors to provide account statements, eitherdirectly or via the client’s custodian, regardless of whether the advisor is deemed to have custody ofclient assets under Advisors Act Rule 206(4)-2 or the advisor is a sponsor (or a designee of a sponsor) ofa managed account program relying on the safe harbor in Investment Company Act rule 3a-4. Specific Questions to answer:
· To what extent do retail clients already receive account statements? They receive way too many statements! They receive statements from every single custodian they invest with, as well as a consolidated statement from their investment advisor. They receive trade confirmations, new account confirmations, prospectus's for every single fund the advisor buys and sells out of... and all this just creates confusion and frustration from clients about getting too much mail, or not knowing why they are getting certain correspondence from the custodians.
· To what extent do those account statements specify the dollar amounts charged foradvisory fees and other fees (e.g., brokerage fees) and expenses? ???
· Would retail clients benefit from a requirement that they receive account statementsfrom investment advisors? I think it's a good "best practice" for advisors, but I don't think it should be required.
· What other information would be useful for retail clients to receive on accountstatements? I think it should be required to label very distinctly on statements from advisors, custodians, or annuity companies what kind of account it is. I've seen a lot of statements that never tell you if the money is qualified or non-qualified, and that is a very important thing to know about your money before making decisions. I've known people who thought their advisor sold them bonds, and instead it was a variable annuity, because it wasn't labeled.
· How often should retail clients receive account statements? Quarterly
· How costly would it be to provide account statements? Very costly, up to $2/statement, more if we're paying for someone to prepare it for us.
3. Financial Responsibility
When the SEC discovers serious fraud by an advisor, often the assets of the advisor are insufficient tocompensate clients for their loss. In addition, investment advisors are not required to obtain fidelitybonds unlike many other financial service providers that have access to client assets.
· Should SEC- registered investment advisors be subject to financial responsibilityrequirements along the lines of those that apply to broker-dealers? No, it hurts the small shops and the solo-advisors
· Is there a need for minimum capital or financial responsibility requirements? No.
· Is there a need for fidelity bonds? If an advisor shows a bad track record with shady dealings, or too many clients file complaints, but its not enough to take away their license, then yes, it might be a good thing to require case-by-case
· Should advisors be required to obtain annual audits for their financials? Maybe the large firms, again, nothing that might hurt a small shop or solo advisor
Thank you,
Lauren Dalton