Jul. 31, 2018
Dear SEC,I would like to add my commentary related to:
S7-07-18 for Regulation Best Interest S7-08-18 for Form CRS/Titles comments S7-09-18 for the RIA Harmonization proposals
Before I begin I would like to state that in my experience working with clients, the general public doesn't know what questions to ask an advisor to determine what kind of advice and for what price they will receive it. Due to this fact, it is EXTREMELY urgent that all dealings with clients for ALL advisors must be made simple and easy to understand. There is a lot of jargon in this industry that quickly pushes the comprehension of many people who are not experienced with that language.
S7-07-18 for Regulation Best Interest
I am the sole owner of an independent RIA in Utah. I started my own firm (rather than joining another) because ALL the firms that I interviewed with contained SUBSTANTIAL conflicts of interest due to how they are compensated through commissions for pushing insurance or investment products. When you work for a company that is associated with a broker-dealer, you HAVE to sell certain things to clients. Often times these lead to great commissions to the advisor with higher and damaging costs to the client.I fear greatly that by adding language of "best interest" to broker-dealers would be very damaging for the public. Working with broker-dealers creates a situation where acting in the best interest of the client becomes very difficult. This will lead the general public (most of which is vastly uneducated already regarding the damage that improper advice can have) to have a false sense of security when working with financial advisors tied to a broker-dealer as they sell products rather than give holistic advice.
Rather than trying to force broker-dealers and associated firms and advisors to adhere to language such as "best interest" why not drive a differentiating wedge between holistic, independent, RIAs and broker-dealer, commission-receiving firms. Differentiating the types of organizations based on how they are compensated and what they are offering will allow the public a greater chance to choose which type of firm to work with.
S7-08-18 for Form CRS/Titles comments
I am also concerned that the Form CRS disclosure contains confusing language. It feels that it confuses rather than clarifies the distinction between who can legally offer advice and who cannot. This may result in the relaxing of the barriers of entry to the industry thus offering the chance of improper guidance to damage the savings of Americans.Also, with hybrid broker-dealers, there is the issue that clients will think they are being told information that is in their best interest when it is actually a sales pitch.
S7-09-18 for the RIA Harmonization proposals
I think that having some education requirements beyond series licensing with continual education requirements would be a very beneficial step. Further steps taken in this direction will be welcomed by me.In the industry, there are those who really help people with holistic, unbiased advice with all conflicts of interest removed (as much as possible). Then there are those that don't know what they are doing, but are told to sell things to people so they can get a nice car and a fancy house. The more education requirements and the more barriers of entry that come by way of regulations will deter those who are interested in the industry as a way to get rich quick while maintaining those who are dedicated to making financial planning a profession and helping Americans live great lives.
Thank you for your time and consideration. I appreciate what you do for our great country and hope that we can do what is right for those that are seeking good advice and not a sales pitch.
Spencer Stephens
Financial Planner
Rooted Interest, LLC