Letters to the editor: Sept. 17

I want to thank you for having Mary Beth Franklin as a contributing editor.

Each issue, I look for her column first and then read the rest of InvestmentNews. I also keep Ms. Franklin’s articles because they are great reference sources for Social Security strategies and information.

She is doing an incredible amount of good by giving financial advisers information and practical strategies on how to help clients and spouses build a stronger financial base. Delaying their Social Security payments so they can receive higher lifetime income from Social Security and higher cost-of-living allowances will make a big difference in the quality of their retirements.

I have been an adviser for 41 years, am a certified financial planner and over the years have seen countless examples of people whose lives would have changed for the better had they read Ms. Franklin’s columns.

Life expectancy has improved so dramatically that we now advise our clients to plan to live 30 years “without a paycheck.” Improving their Social Security benefit by as much as 74% using Ms. Franklin’s strategies certainly helps them live a much richer life after retirement.

Stan Mock

Principal

Financial Planning Services LLC

Boise, Idaho

I read the article “Guaranteed income a top priority for advisers and clients when picking annuities” (InvestmentNews.com, Sept. 11), which reported on a survey from Cogent Research LLC and the Insured Retirement Institute in which 312 financial advisers said that guaranteed income was the second-most-important factor that they consider when selecting variable annuities.

In a similar poll, 475 investors echoed the emphasis on getting a lifetime paycheck, with guaranteed income being the top reason for buying an annuity. Doing it because their adviser recommended the purchase came in second, while tax deferral followed in third.

When evaluating annuities, I think it is important for clients to understand what the adviser is getting paid to sell the annuity contract. High commissions are driving the sales.

Unfortunately, the vast majority of annuity sales are done under the suitability standard, not a fiduciary standard.

Steve Jacobsmeier

Financial adviser

Heritage Financial Services Inc.

Westwood, Mass.

I find it very disappointing that the Securities and Exchange Commission would choose to take on financial adviser Ray Lucia (“Celeb strategist with national radio show misled prospective clients, SEC says,” Sept. 10).

The SEC is wasting the taxpayers’ money on this issue.

Where was the SEC when it came to taking on Bernard Madoff and other true criminals?

Why pick a fight with someone who has no one complaining?

I have listened to Mr. Lucia’s daily radio program for 10-plus years and credit him with most of my success as an adviser. He is my leading source for the latest and most up-to-date financial planning strategies.

Mr. Lucia’s “bucket” strategy is the one I know. If there is a better one, please let us know.

Until then, I plan to continue, with the utmost confidence, to use the bucket approach for my clients.

Scot Hanson

Certified financial planner

Educators Financial

Services Inc.

Cambridge, Minn.

With the recent debates over SRO versus SEC regulation of investment professionals, the proponents seem to forget that there are some people in this profession who are going to be pummeled and possibly pushed out of the business, based on the actions of a self-regulatory organization or the Securities and Exchange Commission.

These are the exact people who work to prevent rip-offs.

There are financial advisers who don’t sell investments, don’t manage investments, have no direct oversight of investments and never have access to anyone’s investment account — nor do they want to have access. Unlike the Madoff people or the brokers who had or have direct fiduciary access to money, there are advisers that are more like umpires as they review assets; they review what the players are doing and point out issues as a matter of opinion.

These advisers offer advice and information, not products. They are the ones who say, “If it is too good to be true, it probably is.”

I wonder how many of the wealthy and not-so-wealthy people who lost money with Bernard Madoff had someone like this looking over their shoulder.

These advisers are compensated by the fees they charge — like accountants and attorneys; no commission, fee-sharing or other arrangements.

Yet these professionals must be registered as investment advisers and fall under the same scrutiny of the SEC or state that any large brokerage must fall under. They will have to pay large fees and fall under someone’s crushing scrutiny when in fact they are completely transparent in the first place.

Yet if these advisers don’t register when they give advice, they can be sued for acting without being a registered investment adviser.

In my own situation, I remember one review of my little one-person office with an SEC auditor. She spent a week’s time looking at files and asking me about every type of account that we don’t create, manage or get involved with.

This auditor was sure that we must have something in our files. I frankly felt sorry for her because I am one of those odd advisers — not what she normally sees.

Finally, at the end of the week, she left with nothing to say.

It would be nice if there was a carve-out for those who aren’t brokers or custodians and who don’t take on access to client funds.

There really is no large industry group that looks out for us.

It all seems to be interest-based, with the large money pushing the discussion.

Armand D’Alo

Principal

Oak Tree Advisory Services Inc.

Carlsbad, Calif.

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