August 30, 2010
I think better disclosure of conflicts is the key. I get frustrated when brokers put retail clients into front end loaded fees only because they want the commission. It's such a blatant conflict of interest and yet it happens every day. I understand why smaller mutual funds pay these commissions to brokers, they need assets, but there's no way its' acting in the best interest of a client to charge them 5.5% up front just because that's the best financial outcome for the broker.
I'm opposed to requiring broker/dealers to act with the same fiduciary responsibility of an RIA. In theory, it sounds like a good idea, but broker/dealers need to be able to make markets and take the other side of trades, which would be impossible to do in any principal transaction.
The key to me is greater disclosure of conflicts and fees. People should understand the fees they are paying the to whom they are paying those fees.