By: Henry Blodget
Source: businessinsider.com
Buried in Obama’s financial reform plan is a requirement to make stockbrokers act in the best interests of their clients (“fiduciary responsibility”). This would replace the current conduct standard, which merely requires brokers not to stuff their clients accounts full of products they would be crazy to buy (“suitability”).
Requiring brokers to operate under a fiduciary standard could force them to offer products that are less costly and more tax-efficient. They will have to disclose any potential conflicts of interest, such as any fees they may get for favoring one product over another. That could mean clients will be offered fewer proprietary products if the broker can find a lower-cost option elsewhere.
Now, Here’s The REAL End Of Wall Street
