From: leefeldman@comcast.net [mailto:leefeldman@comcast.net] 

Sent: Friday, July 17, 2015 2:38 PM

To: EBSA, E-ORI - EBSA

Cc: leefeldman

Subject: RIN 12 10 - AB32 Comments on Fiduciary /conflict of interest rules

Doing what is best for the client sounds great to someone who does not understand 

Financial Planning.

No one is qualified to provide the advice which is best for the client. In order to give the 

best advice, and advisor must have expert knowledge of Bank, Insurance, and 

Securities products, as well as the strategies which employ those products. 

Furthermore, the advisor must be licensed to sell those products and to provide that 

advice. Moreover, there are legal and tax consequences for every investment choice 

that can be made. Finally, a comparison of all investment choices requires analytical 

skills beyond operating a calculator, or a spreadsheet. Besides being licensed in 

Securities and Insurance, an advisor would have to be a Lawyer, a CPA, and a 

Mathematician in order to provide the client with the best advice.

The only way to protect the public is to inform them that they should consult 

several financial advisors before making their investment decision.

Besides telling the client how advisors get paid, they should also list their licenses by

stating:

“I am only licensed to advise you about __________ investments. You should 

consult other licensed professionals for different investment options.”

Furthermore, the client should be required to sign a statement regarding:

Their investment objectives and risk profile, and

That they are of sound mind and body.

Moreover, what is best for the client, like beauty, is in the eye of the beholder, and 

suffers from an overabundance of hind sight. The US Constitution prohibits Ex Post 

Facto laws, and the punishment which could result. If very specific rules are created, 

they are enforceable. Vague generalities like best interests of the client effectively allow 

the enforcement person to define what is punishable after the act was committed, and 

that is a violation of the US Constitution.

Consider a real life nightmare:

In 2008, California Insurance agent, Glenn A Neasham, sold an annuity to an 83 year 

old woman. State reulations said she was not too old to buy that product. Later it was 

discovered that the woman had been diagnosed with dementia before she bought the 

annuity. She seemed normal to Neasham and his staff, and they had no indication of 
her dementia. However Neasham was tried and convicted for felony theft because the 

California Department of Insurance determined that the transaction was illegal.

Neasham was convicted, and sentenced to 300 days in jail as well as 3 years formal 

probation. Mr. Neasham lost his insurance license, his reputation, his house, and a 

small fortune in legal fees. Eventually the criminal conviction was overturned because 

the appellate court decided that the prosecutor did not prove theft since the annuity sale 

amounted to an exchange of equal value, and the state did not prove that there was intent to steal.

At age 52, Neasham lost almost everything because some enforcement agency defined 

a crime after the event took place. How would you like to lose everything you worked for 

your entire life just because someone was given overly broad authority which was not 

specifically defined?

Bankers, Insurance Agents, licensed Securities Salesmen, and Registered investment 

Advisors are all providing investment advice; the fact that they are discussing different 

investment products and strategies does not change the character of what they are 

doing, nor their fiduciary responsibilities to the client. The same Fiduciary rules 

should apply to Bankers, insurance Agents, Stockbrokers, and Registered 

Investment Advisors.

It would be best for the DOL to invite the Securities Industry ( Stockbrokers, Mutual 

Fund salesmen, and Registered Investment Advisors), Insurance Agents (Life, Health 

and Long Term Care), as well as the Banking industry to propose specific tactics and 

investment schemes which should be banned. Each of those financial experts compete 

with the others. They know what the competition does, and what they would like to 

prevent them from doing. Then the DOL should create a committee of representatives 

from all three financial areas to forge a set of specific rules which are punishable.

.

As an example of the real biases which dominate Retirement Income advice, 

consider the following:

Some Stockbrokers are licensed to sell Life Insurance products but never sell any 

Insurance product except Variable Annuities. Registered Investment Advisors are not 

usually licensed to sell Life Insurance. Registered Investment Advisors, and 

Stockbrokers do not advise their clients to buy Fixed Immediate Annuities for retirement 

income because they lose control of their client’s money (i.e. future fees and 

commissions) Instead, they usually advise clients to use Systematic Withdrawal as a 

means to provide Retirement cash flow even though Systematic Withdrawal can and 

has led to bankruptcy in the past. There is even a fallacy that a 4% withdrawal rate 

works. Even 4% has gone bankrupt in the past!
Insurance Agents recommend Fixed Immediate Annuities for retirement income 

because they cannot sell securities. The results are guaranteed, but, as you live longer 

that guaranty means a guaranteed loss of buying power during your retirement.

Bankers would recommend a CD ladder to provide retirement income, but Bankers 

cannot guarantee the interest rates on their products beyond 10 years. In the early 

1990s, retirees were living off the interest on their retirement savings until interest rates 

went into the toilet. Their “brilliant“ CD Ladder plan failed, and forced them to spend 

their savings. In some cases their life savings were wiped out so that they were living on 

Social Security alone.

Again, everyone is biased by what they know or do not know, and by how they can be 

paid. The only way the customer can avoid that problem is to consult with many 

different advisers, and that advice is the best thing which the Department of Labor can 

do for retirement plan investors.

Thank You,

Lee Feldman

412 561 0321