Financial Reform: SEC Needs to Make Sure Fiduciary Duty Applies to All Stockbrokers and Financial Advisors, Not Just Registered Investment Advisors

For decades, financial institutions have purposefully blurred the distinction between stockbrokers and investment advisors to the point that most investors believe those designations mean the same thing.

More than two-thirds of the investors in the United States have the mistaken belief that stockbrokers hold themselves to the same fiduciary standards – including a commitment to always put the interests of the client first – as registered investment advisors. These mistaken beliefs have troubling consequences for investors, and the Dodd–Frank Wall Street Reform and Consumer Protection Act should lead the SEC to promptly solve this significant problem. As discussed below, the SEC needs to clearly establish that fiduciary standards apply to all investment professionals.

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