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The Fiduciary Duty Standard For Stock Brokers: Signs Of Life!

Following the financial crisis, Congress passed Dodd-Frank. The legislation authorized the Securities Exchange Commission to enact rules for a "fiduciary duty standard" in which stock brokers at firms like Merrill Lynch and UBS would be required to put the customer's interest first.

This fiduciary standard stands in sharp contrast with the existing "suitability" standard in place in the securities industry. Instead of putting a client's interests first, brokers at Merrill and UBS are simply required to make suitable recommendations judged at the time of a stock, bond or mutual fund purchase and not at any point in time later on. The broker's recommendation simply has to be consistent with the best interests of the customers, based on his or her needs, objectives and unique circumstances.

Investment advisers and advisers who consult pension funds already adhere to the fiduciary standard, which is far more time consuming and potentially more costly. Wall… Read More …