Obama Administration Proposes Fiduciary Standards for Brokers

The Obama administration's proposed financial services regulatory overhaul may have a profound impact on the way that investment advice is disseminated in the United States.

The administration's proposal would impose a fiduciary standard on financial advisors who offer investment advice.

As reported earlier, stockbrokers are currently held to standards of "suitability" which is a much lower standard than a fiduciary obligation.  From a consumer perspective, the difference between an advisory account and a brokerage account is critical.

While the proposal has a long road to become reality, the implications of an across the board fiduciary standard for financial advice would be far reaching.  The standard would likely affect existing business models, compensation methods, and certainly product recommendations.

Some form of minimum fiduciary standard would be a huge win for financial services consumers in the United States.