July 30, 2018
I have concerns about the proposed regulation best interest (S7-07-18) and investment adviser regulation (S7-09-18).
Ever since 1940 the investment advisers act specifically added the requirement that if a financial organization provides advice to clients, they must register as an RIA and provide that advice on a fiduciary basis. Broker-dealers were regulated under a different act and were limited to providing advice (following a lesser standard) only on an incidental basis. That was how most such firms operated and so worked well.
Today we have broker-dealers making as much money providing advice as making trades (their primary business). They are calling themselves advisers, yet they are not registered as RIAs and are not held to a fiduciary standard. This is a great source of confusion and disservice to the public.
The proposed regulations in my opinion do nothing to change this. The public will never understand the nuances of these new regulations.
I request that you consider eliminating the proposed legislation and simply require all broker-dealers to track revenue from advice (in whatever way it's paid), and require those whose advice revenue is greater than 25% of their total income to register as RIAs. Those that do not (1) should not be allowed to provide advice and (2) more importantly should not be allowed to use the term adviser or advisor in promoting themselves. This would not eliminate commission-based sales but rather make it clearer to the public what they are paying for and what they are getting when they make their choices.
Thanks for your consideration.
Artie Green