July 29, 2010
Imposing fiduciary standards on Registered Reps of Broker Dealers may or may not result in more ethical practices for consumers. There are bad apples in all professions regardless of rules.
I predict requiring a fiduciary standard will result in less access to professional help for the small investor. Liability insurance costs for Reps and Broker Dealers will rise. Some BDs and Reps will increase the minimum size of accounts they will consider handling leaving smaller investors fewer choices and little or no professional help. Other Reps and BDs, even those who already practice in the manner envisioned by the new standard, will just cease to continue in the business due to the added administrative nuisance that will come about because of added rules. I am a possibility in that catagory. I have never had a complaint registered against me in over 40 years in the financial industry. I can afford to retire but continue to practice because I enjoy it. If you choose to kill the joy, I just may choose to hang it up. I feel sure that others will.