July 3, 2018
I have read your Hypothetical Relationship Summary describing the two ways a client can interact with a dually-registered broker/RIA Representative.
I think it is quite well-balanced, not too detailed and, correctly, describes that either an advisory relationship or a brokerage relationship has potential for abuse or financial incentives to utilize some products over others.
In my opinion, the DOL rule did NOT accomplish that and was too slanted toward an advisory relationship which does NOT solve the conflicts in many cases.
I could easily live with the disclosure as written and have a discussion of the pros and cons of each relationship with the client.
My only observation would be that the disclosure is very well-focused for a typical "wirehouse" client. I am affiliated with an insurance company owned broker dealer/RIA and the VAST majority of our transactions on the brokerage side are mutual funds, variable annuity/life (Series 6 products).
VERY few individual security accounts. On the RIA-side it is all managed accounts (Envestnet,etc. or manager referral programs). It would be helpful to have a disclosure document that was a bit more oriented to the "non-wirehouse" community so we aren't discussing issues with clients that no one is recommending ("acting as principal", etc.) However, I could work with what you have proposed and THANK YOU for the balance it represents.
Sincerely,
Richard T. Nolan