A new ruling by the U.S. Court of Appeals in D.C. means that brokers will now be subject to the same regulatory standards as investment advisors. Previously brokers could sell you whatever crappy investment that made them the biggest commission and only pretend to have your best interests at heart, and then not get sued when those investments lost you a bundle:
The U.S. Court of Appeals for the District of Columbia ruled March 30 that the Securities and Exchange Commission doesn't have the authority to allow some brokers to sidestep regulation as investment advisers. The court's ruling makes all brokers fiduciaries, and increases their responsibility and liability to clients.
Investment advisers adhere to a different set of standards than the transaction-oriented broker, or registered representatives, as they are known in the financial-services industry. Investment advisers are mandated to provide advice that is in the best interest of a client. They can't recommend an investment product strictly for the purposes of a sale.
Rather, investment advisers have to take into account an investor's entire financial planning scenario and give appropriate advice. Registered representative brokers, however, could until now sell investment products that were in their best interest (say a higher-paying commission product) instead of in their client's best interest.
This is probably why more wealthy people have chosen investment advisers to manage their money. Can you trust that a broker employed by a large Wall Street brokerage firm is selling you the right type of investment product for your portfolio or is merely trying to make a buck?"
No, you can't. That's why the founders of MAXfunds.com manage money as commission-free investment advisors, not as brokers.
A new ruling by the U.S. Court of Appeals in D.C. means that brokers will now be subject to the same regulatory standards as investment advisors. Previously brokers could sell you whatever crappy investment that made them the biggest commission and only pretend to have your best interests at heart, and then not get sued when those investments lost you a bundle:
The U.S. Court of Appeals for the District of Columbia ruled March 30 that the Securities and Exchange Commission doesn't have the authority to allow some brokers to sidestep regulation as investment advisers. The court's ruling makes all brokers fiduciaries, and increases their responsibility and liability to clients.
Investment advisers adhere to a different set of standards than the transaction-oriented broker, or registered representatives, as they are known in the financial-services industry. Investment advisers are mandated to provide advice that is in the best interest of a client. They can't recommend an investment product strictly for the purposes of a sale.
Rather, investment advisers have to take into account an investor's entire financial planning scenario and give appropriate advice. Registered representative brokers, however, could until now sell investment products that were in their best interest (say a higher-paying commission product) instead of in their client's best interest.
This is probably why more wealthy people have chosen investment advisers to manage their money. Can you trust that a broker employed by a large Wall Street brokerage firm is selling you the right type of investment product for your portfolio or is merely trying to make a buck?"
No, you can't. That's why the founders of MAXfunds.com manage money as commission-free investment advisors, not as brokers.
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