When Does a Broker Become a Fiduciary?

There has been much discussion around the Department of Labor’s fiduciary rule, which looks like it will take effect soon. Basically, it would make registered representatives (brokers) fiduciaries to all retirement accounts. This is a change from the current “suitability” standard, which, while important, is not the same as a best interests duty of loyalty. At the moment, however, brokers can still step into a fiduciary role, depending on what they are doing for a client and how they are being paid (commissions v. fees). Here’s a diagram to help figure it out:

broker

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s