Brokers Battle Against Fiduciary Trust

There is a battle going on in the Senate over Financial Regulation – and one of the skirmishes divides the Financial community on Fiduciary Trust. It is a case of Brokers versus Financial advisors. Brokers-dealers [think Merrill Lynch, Charles Schwab, etc] are resisting fiercely having to adhere to the Fiduciary Trust standards that Financial and Investment advisers do. Newly proposed legislation would mean that all stock brokers would now have legal obligations to “do no financial harm to clients” instead of the current “nudge, nudge, wink, wink, know what I mean – Know what I mean” .  Financial advisers are crying foul because stock brokers increasingly provide more of their advisory services but without having the same costs and legal obligations for fiduciary trust. So in the process, the nation is seeing once again a glimpse of who is working for them in the financial field:

1)Financial lobbyists  are working to water down or eliminate the provision. Imagine the power they have now  with no restrictions on campaign financing going into an election year.
2)Republicans mouthing support for consumers are letting this one slip.
3)Note the number of women who head up the Financial regulators and their near unanimous support for broker-dealers having to also conform to fiduciary trust standards.

Just a quick but telling snapshot of how well Washington is working for its constituents on a matter of vital importance given the Financial Crisis of 2007-2009.

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