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April 20, 2010 at 05:13 AM
Here’s an exchange I recently had with an independent registered rep, who’s a friend of mine. I hope you’ll find this as enlightening as I did.
RR: “I recently sent out a client satisfaction survey to my rather well-educated clients and explained the fiduciary vs. suitability standard and asked if they were aware of which standard applied to our relationship and if that mattered to them. So far the answers are all don’t know and don’t care.’”
Me: “Thanks for the e-mail. I’d love to see what you actually sent to your clients. Did you really explain to them that as a registered rep under the ‘suitability standard’ you are legally working for your B/D and are legally required to represent its interests, and not the clients’? Whereas, under a fiduciary duty to the clients, you would be legally required to represent the client’s interest, ahead of your own, or any other institution? That’s the reality, and my sense is that not one financial consumer in 10,000 truly understands this and its ramifications for who’s really looking out for their best interests.”
