March 30, 2005
The proposed point of sale disclosure requirements represent an unreasonable burden for the securities industry. The industry is already overegulated in many aspects and these new propsals are extreme, unrealistic and unnecessary.
Prospectuses for securities products already explain in great detail costs, expenses, fees, etc. Current requirements for disclosure do an adequate job of making it clear to the customer what they are investing in, and how they are impacted by the associated costs.
Currently, the amount of paper required to complete a transaction is well beyond what makes sense. Customers regularly complain about the vast amount of paper involved as it is. I have heard comments about why does it take so many signatures and initials just to complete a single IRA transaction. Rather than better serving the needs of the customer, the proposed requirements will serve to make the customers more confused and more aggravated.
The economic burden of compliance is already damaging to firms involved in the securities business. In general, over regulation takes a serious toll on businesses in this country. The framers of the Constitution believed that less goverment is better than more. At some point, comsumers have to take responsibility for their own decisions.
I sense no public outcry in favor of these proposals. Rather, they are being instigated by supposed public interest attorneys trying to justify their own existence.
People understand there are costs involved with buying anything. They understand someone is going to make a profit, and the sales person is making a living serving the needs of the customer. Regulators often assume that consumers are not intelligent enough to make good decisions. My experience is that that is not the case.
The disclosure of costs is best left to product producers. They are in the best position, via prospectuses and associated materials, to make known the costs. Shifting more responsibility on sales representatives will not have any additional positive effect. Disclosure forms will not be standardized throughout the industry creating even more confusion.
Responsible investment representatives already make sure the customer understands what they are buying. Conversely, no amount of regulation will prevent those bent on doing a disservice to a customer from doing so.
Again: No more unnecessary, overburdensome regulation