From: Chris Weber [mailto:chrisw@community-resourcebank.com] 

Sent: Wednesday, July 08, 2015 2:51 PM

To: EBSA, E-ORI - EBSA

Subject: Financial Advice Proposal

There are three ways I see financial advice delivered today:

• Fee driven advice where fees are usually a percentage of assets.

• Commission based advice where a percentage is usually charged on the front end or a fee can 

be added to a product’s expenses.

• No advice at all, where someone purchases investments without any help.

The above methods are generally in order of expense to the client as well where the first bullet is the 

most. Certainly, there is a range of expense for each bullet point and there is overlap.

My concern with the financial advice proposal is that the second bullet will be completely wiped out as 

IRA’s constitute most client assets. Advisors will have no choice but to move all assets to the first 

bullet. It’s a nice thought to think that all advisors are acting as fiduciaries, but I have been in the 

business over 20 years and feel it is a foil for charging more fees to clients. Firms generally encourage 

moving most assets to so called fee-based accounts because they are more lucrative to the firm. Case in 

point, if you have $100,000 and your advisor charges you 1% a year, over 10 years you are going to pay 

at least 10% in fees based on the initial amount and more because of compounding. If you buy a loaded 

fund, you’d get a break and pay only 3.50% of the initial amount. While the 1% per year provides the 

convenience of being able to move between investments, it is rarely the case that people do. Large cap 

growth fund “A” just isn’t too different from large cap growth fund “B.” Is an advisor really providing 

$10,000 of service to the client when paying the 1% fee? Doubtful.

The difference between advisory and broker-sold products primarily becomes a matter of what licenses 

you hold. Holding a Series 65 or 66 license does not magically make you ethical. Also, just because the 

law says you are a fiduciary, that doesn’t mean everyone is acting in the client’s best interest. Sure, you 

can get disciplined for it, but not acting in a clients’ best interest seems very difficult to prove. I act 

ethically and I am the same person whether I am acting as a broker or an advisor. I always put myself in 

the clients’ shoes.

The other end of the spectrum ... no advice ... is not good either. Journalists or bloggers are not required 

to carry any credentials. That is who will be doing the advising to those with no advice from a 

professional. As with most things, Americans want a good deal and I’m sure there will be plenty that 

choose this route even though they have no investment experience.

I think commission based investments provides the public with a useful and less expensive 

service. FINRA and the SEC are effective regulators. I think they are able to pass down rules much more 

quickly than trying to codify a fiduciary standard. If you feel there are areas where the public is being 

ripped off, we should work with FINRA and the SEC to quickly nip those problems in the bud. “B” shares 

have been eliminated, “C” share limits have been instituted, suitability rules have been enhanced, and 

variable annuity sales require extensive supervision. Left to lawmakers, those things might still be

available due to the difficulty of setting new rules and passing new laws.
I think enhanced suitability tracking and monitoring, breakpoint enforcement, elimination of illiquid 

products (non-traded REITS), prohibition of penny stocks, clearer disclosure with variable annuities, 

among other things would help solve problems related to misleading of consumers. You don’t need to 

add a fiduciary standard to accomplish any of that.

Christopher G. Weber, CFP®

Investment Executive

Cetera Investment Services LLC

Located at: Community Resource Bank

1605 Heritage Drive

Northfield, MN 55057

Direct: 507-645-1841

Assistant: Tanya Gjerdingen, 507-645-3130

Toll Free: 800-250-8420 x3841

Fax: 507-645-1868

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