August 30, 2010
I fortunately was able to learn the vast difference between a broker dealer and an investment advisor many years ago (2000) and seriously considered a career path in the area of investment advisement and financial planning. The concept seemed a bit new at the time and I am shocked even today how many individuals do not understand the difference between these professions. It's also clear to me the broker dealer industry does not clearly communicate a thorough understanding of the fiduciary duty they do not have when doing business with clients and appear to often times even pose themselves as providing services in a investment advisement like fashion. Fortunately for the broker industry the every day individual investor is not aware of the differences and believes that their broker dealer is acting in the best interest of the client when they in fact are not. If changes are going to be made I would recommend the SEC require new and improved communications be required from broker dealers to prospective and active clients specifically stating that they do not have a responsibility for acting in the best interest of their client and at times the investment recommendations provided may in fact not be suitable for a particular individual.