More Fiduciary Duties for Stockbrokers

March 13, 2011

I’ve posted here and here about  how anyone who invests your money for you should have fiduciary duties.  The Wall Street Journal has joined the crowd with a story about how the rules are about to change:

Currently, some people who provide important advice about plan investments currently aren’t held responsible for the quality of their recommendations. But mutual-fund companies are worried that the proposed new rules will be so restrictive that they will prevent them from offering general advice about, say, asset allocation or rollovers to individual retirement accounts.

And  advises that:

• Ask those giving you investment advice, sales pitches or specific retirement-plan suggestions if they are acting under a fiduciary standard of care. If they aren’t, ask if they are willing to act as a fiduciary in your case, putting your interests first—and to confirm that in writing.

• Insist that advisers offering specific investments inform you of any conflicts of interest related to their recommendations and disclose any commissions, referral fees or other compensation they would receive from selling you a financial product. Both should be put in writing.

• Don’t be afraid to be impolite—always ask what an investment will cost, both in commissions and in built-in expenses such as fund expenses.

This is good advice.   And remember, this is your money, and your broker is getting paid for his or her expertise.  Be careful.



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