- On November 15, 2016
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By Andy Goldwasser
This is a question that resonates equally with the financial sector as it does with those dedicated to representing victims of financial fraud and stockbroker misconduct. Most believe Mr. Trump will repeal the rule. But even so, the fiduciary rule has helped define the standard of care for a financial advisor by bringing a client’s best interest to the forefront of every investment decision.
The ”fiduciary rule” requires brokers working on retirement accounts to act as “fiduciaries” who operate in the “best interest” of clients. Previously, brokers were required to give “suitable” guidance, a much looser standard. Consumers in large part have praised the rule claiming it is a mandate for advisors to finally deliver on the promise of guiding clients as opposed to simply selling investments. Conversely, the financial industry claims the fiduciary rule unfairly criticizes financial advisors and is unduly burdensome.
Regardless of whether the fiduciary rule is repealed, the issue of a client’s best interest has been moved into the spotlight. Every advisor owes a duty to his or her client to make suitable investment recommendations. The recommendations should be in the best interest of the client, in-line with the investor’s objectives, and in writing. This duty exists for every financial advisor. Most advisors have adhered to a best-interest standard of care. But for those advisors who haven’t, and for those advisors who don’t, the advisor should be held accountable for breaching the standard of care – regardless of whether the broker is a “fiduciary” or mere “advisor.”