Advisers should live up to fiduciary responsibility

An article in the June 23 issue, “Schwab faces adviser discontent,” which focused on the Schwab Yield Plus Fund, from The Charles Schwab Corp. of San Francisco, noted that at least some retail clients have received settlement offers, whereas institutional clients haven’t, according to several sources.

It is important to note that institutional clients have employed a professional who is supposed to be performing due diligence on behalf of the client: their investment adviser.

Too many advisers, in their headlong rush to get assets in the door, aren’t doing their own due diligence and are simply relying on how many stars someone else says a fund has.

These advisers are slouches. They are trying to shift the blame for their own lack of thoroughness.

My advice: As an investment adviser, you are a fiduciary. Live up to that and take responsibility for your fund picks or get out of the business.

Todd C. Ganos
Principal
Doolittle & Ganos Investment Counsel LLC
Carmel, Calif.

CFP rules will give leg up to those with designation

I read the article about the pending changes to the CFP rules that will require additional disclosure and communication with clients and prospects, and I must say that I am not surprised by the reactions of the financial advisers quoted.

Just as I have seen many registered representatives hand in their Series 6 and 7 licenses so that they can focus on selling fixed or equity index annuities — basically, running away from oversight — it doesn’t surprise me to learn that some certified financial planners might give up their designations simply because of the additional requirements that will soon be imposed by the CFP Board.

It is a sad commentary on our industry when almost everyone acknowledges that far too often, investors are confused or not adequately informed about the recommendations of their “advisers,” while at the same time, advisers are fighting against meaningful changes that can help address that confusion to the investors’ benefit.

Practices such as selling proprietary investments without disclosing the consequences should the investor choose to leave their adviser (and that is just one of many issues that I think needs to be addressed) must be corrected so that investors, particularly retirees, don’t find themselves being penalized for accessing their hard-earned money just when they need it most.

While I would prefer that our industry handle this through one of the many possible regulatory avenues available, I am very glad that someone is doing something to make sure that investors are treated better.

What I also find interesting about the article are the comments made by one CFP indicating a belief that the new rules will cause CFPs to not take “small accounts,” defined as those between $100,000 and $300,000.

It is a sad state of affairs when a $200,000 account can’t be managed for a profit by someone other than a “junior associate.” A $200,000 account is very often all the money that a retiree has, and are they really best served by having the least experienced person in the office looking after their money?

I am not a CFP and had no plans to be one until I recently read about the new changes to the CFP rules that require designees to act in a “fiduciary manner.”

That requirement alone has caused me to rethink my view and to pursue obtaining the CFP designation.

I believe that once the new rules are in force, CFPs will have a leg up on all other investment professionals because the investing public will be able to look at their CFPs and know that they are absolutely working in their best interests, and not just in the best interests of the firm.

Todd VanDenburg
Owner
VanDenburg Financial and Insurance Services
Santa Rosa, Calif.

CFP Board is the problem, not the solution

Re: the article in the June 30 issue “New CFP rules could be hard on smaller clients,” it isn’t my intention to terminate my relationship with my smaller clients.

These are the people who were some of my first clients and who helped me build my practice. They aren’t just clients but dear friends with whom I have had a long relationship based upon excellent service, trust and mutual respect.

They rely on me. I have helped them with their families.

I have been a pallbearer at their funerals and attended their birthday and anniversary parties.

What needs to go is the layers of bureaucrats that are making it nearly impossible for me to serve my clients.

Henceforth, as I did with my Series 6, 7, 63 and 24 licenses, I will be terminating my certified financial planner designation when it renews July 31.

In addition to the reasons mentioned in your article, I have a few other good reasons to terminate my CFP designation.

First, I will never submit to the new code of ethics, which demands that I always place my clients’ interests above my own.

My family and employees will always come first.

Beyond that, I will seek out mutually beneficial relationships with my clients. I will charge prices that are fair, and should a conflict of interest ever arise, it will be disclosed.

The new code is a recipe for litigation, as the ambiguity invites in the lawyers, who are just aching to extract money from the poor dupes who sign on to this code.

Second, I will no longer waste my time by subjecting myself to the Washington-based Certified Financial Planner Board of Standards Inc.’s biennial ethics course. It is bogus that I should be forced to submit to a course to tell me not to do things that only the thugs who devised the course would dream of doing.

After 24 years in business with no complaints or lawsuits, I think that it is fair to say that I know what I am doing and that I do it with integrity.

Next, at no time do I ever recall granting the board the authority to take my dues money and make grants to other organizations. If my money is to be given away, I will be the one to do it.

Finally, if the CFP Board adhered to its own standards of putting clients’ interests above its own, it wouldn’t pay its chief executive, Sarah Teslik, $575,893 as reported on its Form 990 in 2005.

God only knows what the compensation was in 2006, 2007 and will be this year.

I can’t think of any reason that a bunch of paper pushers should be paid more than I am with none of the liability and none of the commitments that I have. Since the average certified public accountant in Manchester, N.H., earns less than $200,000 a year (less than half of what the CFP Board pays its chief executive), it would seem that the board would do something to protect its clients and get the job done for far less.

Instead, the CFP Board is caught up in this non-profit shell game where the players move from firm to firm always getting higher compensation. What a joke.

I refuse to play that game anymore.

I have had enough of the stupidity. It is time to spend my efforts and my money on my clients, my family and my community.

Stephen N. Mathieu
President
Legacy Financial Solutions Inc.
Manchester, N.H.

Finra proposal is example of regulator overdrive

I read with interest the article in the June 30 issue “Brokers, advisers blast Finra proposal.”

This is but another example of regulator overdrive, which will lead to nothing but burdensome and largely ineffective regulation by the New York- and Washington-based Financial Industry Regulatory Authority Inc.

The independent-correspondent-broker-dealer community will be particularly affected by the proposal.

As an attorney with more than 30 years’ experience in representing broker-dealers, I have seen this type of overreach before.

Finra, formerly NASD, is ill-equipped as it is to manage the supervision of many broker-dealer issues.

If broker-dealers, especially the independent-correspondent broker-dealers, are required to begin supervising the activities of their independent representatives in the adviser area beyond what has already been traditionally required, as well as the insurance business, chaos may well ensue. Broker-dealers will now become the “go-to” defendant in lawsuits and arbitration for every kind of sin imaginable.

The proposal as reflected in your article is yet another puddin’-headed example of Finra going where no regulator should go.

David Genelly
Attorney
Vanasco Genelly & Miller
Chicago

Advisers need to help client make right choices

Shouldn’t the title of the article “Market conditions right for fixed annuities” in the June 23 issue really have been “Market conditions right for the sale of fixed annuities”?

Investors typically do the opposite of what they should and “producers” (not “advisers”) are willing and able to help them make those mistakes.

Markets are down, so variable annuities are out of favor? Purchasing a fixed annuity in a higher-inflation and rising-interest-rate environment?

Sales is selling the client what they want; advice is recommending what they need.

Our job as advisers is to help clients break through the emotional aspect of investing and to convince them to make the right choices, not just facilitate an easy sale and move on to the next commission.

Timothy T. Murray
Registered investment adviser
Murray Financial Inc.
Chantilly, Va.

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