Thomas Perez 

Secretary of Labor 

200 Constitution Avenue. NW 

Washington, DC 20210 

July 17, 2015 

Dear Mr. Secretary: 

A number of my colleagues in the 23,000 member Financial Planning Association recently met with 

Phfllys Borzi and others in your Department to express our support of your Department's efforts to 

extend a fiduciary standard of care, raising the professiona I standards of those who interact with 

consumers for the purpose of providing financial advice, products ;rnd services for their retirement. 

One of the outcomes of our meeting with Ms. Borzi was a commitment on our part to present your 

Department with examples of Financial Planners serving those with median incomes under a fiduciary 

standard. As you know, much of the opposition to your initiative includes the suggestion that your 

initiative will "harm the middle-class" by reducing its access to financial services and advice. As a 

Financial Planner who serves many clients that would be characterized as middle-class, please allow me 

to share with you why I support your initiative. 

(Before I shore my perspective as a Financial Planner serving middle-income households under a 

fiduciary standard, allow me to bring your ottention to a second letter that I have enclosed thot 

deols with a separate, personal matter. I would greatly appreciate your help with the second 

letter, as it relates to my Labor Certification request that has been longuishing in the Deportment 

of Lobar for approximately five veors.) 

As I understand it, there are three key dimensions that enhance the experience of consumers who work 

with a financial professional under fiduciary (as opposed to suitability) standards of care: 

1) Consumers can be more confident that a fiduciary framework provides greater objectivity in 

the advice/recommendations being rendered 

2} Consumers are more likely to experience greater trcinsparency when it comes to the 

compensation/distribution costs inherent in their interactions with their financial professionals 

3) Consumers will be more empowered in knowing that they are receiving "per-use'' services (in 

the form of consultations paid hourly/daily) or ongoing service that is commensurate with the 

ongoing compensation that consumers are uware they are paying 

In my eleven years of experience of providing financial products, advice and services to consumers, I 

believe that market forces have led mciny financial intermediaries to become more objective in the 

service-value provided to the public. Proprietary distribution models are less prevalent tha:-: they were 

10 years ago, and more financial professionals present themselves as "product-agnostic" in what they 
do and what they provide to their clientele. This has been encouraging. The consumer demanded 

greater objectivity and, to some degree, there has been progress. 

However, corporate distribution interests often benefit when the inherent compensation being paid by 

the consumer ls obfuscated in difficult to understand language (in lieu of easy-to-understand 

transparency) - placing consumers at a disadvantage. Moreover, vested interests also benefit from 

client relationships that include obfuscated compensation flows without a legal requirement for ongoing 

service. This manifests itself as a result of the attendant vagueness wherein the consumer infers an 

ongoing relationship under a suitability standard at the start of the relationship. While many financial 

professionals do indeed continue to provide a high degree of service under such circumstances, the lack 

of a fiduciary standard does not compel it, leaving the non-fiduciary with more time to distribute to 

additional consumers without the legal responsibility of shepherding the evolving best interests of 

previous clients as time goes on. 

This last point is at the heart of the "take away middle-class access to financial professionals" arguments 

being made against the DOL initiative. Based on my experience, I do not find such arguments convincing 

for two primary reasons: 

Firstly, based on the circumstances of the client's needs and our individual priorities ln the marketplace, 

we are able to negotiate services required and willingness to pay. !f the client's needs are relatively 

simple (which is most often the case for middle-income consumers), than the client and I can agree to a 

rate of compensation that balances what! see as their needs and their willingness to pay (ex: $250-500 

for a one-time meeting, or annual meetings upon mutual agreement). At present, a typical middleincome consumer with $80,000 in a 403B retirement plan in the public or non-profit sector might 

already be paying $800/yr in ongoing distribution costs that are only disclosed in obscure legalese on 

page 97 of a prospectus that has not likely been read by the client in years, if ever. Additionally, the 

consumer in this circumstance may not have seen or heard from the financial professional that initially 

helped them with the 403B years earlier, even though said financial professional {or a 

successor/unnamed distribution partner) continues to receive ongoing compensation from this middleincome consumer! This is not an uncommon example under the current system. Indeed, it is endemic 

to the current system in which the middle-income consumer often ends up paying higher ongoing costs 

with little or no service to show for it. 

Secondly, the arguments that 1 have heard from other industry groups suggesting that increased 

transparency and, therefore, increased professional accountability will lead to reduced access for the 

middle-class is based on the premise that higher professional standards wm eviscerate the numbers of 

those serving middle-income consumers. In other words, SIFMA and others are making a scorchedearth argument that being subject to higher standards will cause many m[ddle-income serving 

"advisors" to pack up and get out of the business altogether. My counter-argument is that encouraging 

higher professional standards will eventually elevate seaworthy boats. Additionally, the inherent nature 

of "best interest" can be highly subjective at a point-In-time, but given that consumers' best financial 

interests change over time along with ever-changing life circumstances, I believe that a framework that 
encourages (and creates a consumer expectation of) ongoing service creates a healthier market across 

the income spectrum, middle-classes included. 

l sense that much of the anxiety being expressed from some financial professionals over the DOL 

proposal is due, at least in part, to the ramifications of imposing higher standards that will tend to make 

it clearer to consumers as to which financial professionals possess higher standards and which do not. 

At present, it is extremely difficult for even seasoned consumers to tell the difference between 

sophisticated, highly trained and diligent financial experts operating with rigorous processes and care 

from somebody who looks good in a suit and seems, at least superficially, to know what they are talking 

about. To the extent that the DO L's proposal encourages a clearer fine of demarcation between 

financial professionals operating under higher standards and those operating under lower standards, 

the consumer experience will tend towards greater empowerment and less obfuscation. I, for one, am 

confident that market participants (consumers and providers) will adjust to higher standards over time. 

Many middle-income consumers might be aware that they receive little or no service from the person 

that helped them with their retirement account years ago, but very few are aware of what they may be 

continuing to pay for the distribution system that is under-serving them. In the 403B example that I 

gave above, they might be paying 1.6% of their annual income (assuming a $50,0DO annual income}. 

Generally speaking, consumers understand that value-for-service includes a price. I spent $250 not too 

long ago to pay an air-conditioner repairman to service my A/C unit. Care and ongoing maintenance of 

one's financial future is easily worth $250-500/yr for a typical middle-income household, and in my 

admittedly biased view, knowledgeable financial professionals who provide that care are at !east as 

valuable as A/C repairmen! !n my experience, middle-income households that pay several hundred or 

even thousands of dollars a year to maintain their household appliances, cars and other costs of living 

are more than willlng to spend 0.5-1.0% of their annual income to know that a knowledgeable 

professional is devoting at least a couple of hours a year fo,cused on their best financial interests now 

and for their future retirement. 

In closing, I am pleased to add my voice in support of the Financial Planning Coalition's support of the 

DOL's initiative to enhance the transparency and care afforded to all types of consumers of financial 

advice, products and services. The suggestions made by the Coalition to improve your initiative are 

reasonable and have my support. I wish you the best in overcoming the efforts of those who would 

scuttle your efforts to encourage a greater professionalization of how consumers are served in their 

financial lives. 

Yours Sincerely, 

A<~ibeyqr~ Miami, Florida