I read your cover story, “Protect Yourself” in the July issue. To say that it was well done, accurate, and completely correct, would be a gross understatement. It went beyond this terminology.

My background as a Certified Asset Protection Specialist and founder of the Strategic Institute, I believe qualifies me to state the above with some experience.

The area of E&O insurance is a farce–you were too kind and generous in your review. I would instruct my broker friends and clients to skip over the fluff and look at the exclusion clauses. This is where the proverbial rubber meets the road and where the truth of what the insurance carriers will not pay stands out. E&O providers, along with the greater majority of insurance carriers who issue professional liability coverages, are in the business of NOT paying claims. Why waste your hard earned money on a policy that will not provide protection when needed?

I have “professionally suggested” to every one of my clients to structure their respective practices wherein they have no assets for a potential plaintiff to acquire. This is also critical in the broker’s personal assets. As you well know, plaintiff attorneys consider “what can be had” before committing to a client. If the defendant has no assets–or insurance–to insure a proper recovery, then 99.9% of all attorneys and plaintiffs, will elect to walk away. This is something to consider.

Brokers need to perform extensive due diligence on pending clients to avoid litigation down the road.

I have noted your ongoing (excellent) series of articles pertaining to the matter of compliance and professional asset protection. Well done and much needed.

Tom Hudson, PhD, CAPS

Spokane, Washington

Look before you leap, then look again

I happened upon your article “A Fund of Your Own” (July 2007) and found it interesting. In my former life at BISYS Fund Services, a mutual fund back office outsourcing firm, I counseled many advisors on the pros and cons of starting a mutual fund.

Having a pool of client assets is absolutely key, and getting beyond $50 million in assets as soon as possible is a must. One other point is to find an administrator that has created an “umbrella” or series trust registered investment company. In that structure, the advisor’s fund is in an existing corporate structure with other funds, saving startup costs and time. Also, all the funds in the trust share some expenses. I estimated that most clients could save between $75,000 and $100,000 in this structure versus a stand-alone fund structure. Also, I can not stress the importance of hiring experienced 1940 Investment Company Act counsel. Too often, I saw clients served by “amateur” counsels that were not versed in mutual funds.

Bottom line–advisors thinking about entering the mutual fund space should evaluate it carefully. I’ve talked many out of it over the years.

Anyways, good to read a success story on that front.

R. Jeffrey Young

Kinwood Group, LLC

Westerville, Ohio

Clarification

In the August 2007 Playing Field column, we mistakenly wrote that SEC Chairman Christopher Cox has promised to either repeal or revamp 12b-1 fees by the end of 2007. It would be more accurate to say that SEC staff will recommend changes by year-end to Cox and the SEC commissioners regarding 12b-1 fees.