Fiduciary Standard Coming for Broker-Dealers

The Securities and Exchange Commission announced last week that next April it plans to introduce a fiduciary standard for broker-dealers. Since last month when the Department of Labor issued its fiduciary rule for tax-advantaged retirement accounts, the securities industry has been waiting to see if the SEC would join the Department of Labor in a push to raise the legal and ethical standards for broker-dealers and agents. Continue reading

Decorative Scales Of Justice In The LibraryThe Securities and Exchange Commission announced last week that next April it plans to introduce a fiduciary standard for broker-dealers. Since last month when the Department of Labor issued its fiduciary rule for tax-advantaged retirement accounts, the securities industry has been waiting to see if the SEC would join the Department of Labor in a push to raise the legal and ethical standards for broker-dealers and agents.

Currently, broker-dealers and agents are held to the less stringent suitability ethical standard while investment advisors and investment advisor representatives are held to the higher fiduciary standard. The higher standard requires disclosure of all conflicts of interest and ensures the client’s interests come first. While SEC Chair Mary Jo White has said she supports a uniform fiduciary rule, Republicans in Congress have strongly opposed the effort by the Labor Department to expand the fiduciary standard to retirement accounts.  However, many in the securities industry hope that the SEC’s efforts will harmonize with the Department of Labor’s efforts, making compliance more uniform and less complicated.

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