August 31, 2010
Most retail investors do not understand the different standards required between a broker dealer and a retail investment advisor. Nor do they understand the legal obligation and fiduciary responsibility. The terminology between Investment advisor and Broker Dealer needs to be clarified upfront so the customer knows exactly what standards they are operating under. Broker Dealers frequently recommend products that are not in the customers best interest but in the Broker Dealers best interest.
Further training must be provided for the retail investor so they are aware of the differences. Broker dealers and financial advisors must make their customers aware that certain investment products may or may not be the right product for them based on their personal situations.