Investment advisers and consumer advocates have applauded President Obama’s proposal to establish a fiduciary duty for broker-dealers offering investment advice.
“We think it’s great,” said Diahann Lassus, chairwoman of the National Association of Personal Financial Advisors in Arlington Heights, Ill. “There should be a fiduciary standard for all advisers.”
Richard Salmen, president of the Denver-based Financial Planning Association, agrees.
“I’m encouraged by the fact that the administration is proposing a fiduciary standard for all that provide advice to the public,” he said. “That’s a positive sign.”
The proposal was part of a historic reform package unveiled by the White House last Wednesday that is intended to overhaul nearly every aspect of Wall Street in order to prevent another financial crisis.
Both the FPA and NAPFA have been ardent proponents of requiring brokers offering investment advice to be brought under a fiduciary standard, which would require that they put their clients’ interests ahead of their own. Currently, brokers are required to meet a suitability standard, meaning the advice and products they offer have to be suitable for their clients