'Fiduciary Standard' for Brokers is Going to Happen

2:10 PM Eastern Daylight Time Jun 24, 2010
WASHINGTON, June 24 (Reuters) – U.S. lawmakers agreed on Thursday to give the Securities and Exchange Commission authority to impose fiduciary duties on broker-dealers who provide financial advice.
Lawmakers hashing out a financial regulation bill said the SEC would get this authority after conducting a six-month study on the issue.
The House and Senate hope to merge their bills this week so they can send a final version of the regulatory overhaul to President Barack Obama to sign into law by early July.

I originally said to expect a one year study, this is happening in half that time. 

Now brokers will be judged based on not just suitability of the product but on whether or not the actions they are recommending to the client are in the client’s best interest. 

If brokers will now be held to the Fiduciary Standard, the question becomes whether there is a point anymore to distinguish them from RIAs (Registered Investment Advisors).  Many brokers are also advisors (hyrbids, in industry parlance).  Now their conduct will be judged the same way regardless of which hat they happen to be wearing (broker or advisor).

This is a good thing in my eyes as it clears up the confusion for civilians, many of whom have never been aware that brokers didn’t always have to act in their best interests.

I’ll be out with a lengthier piece on this as more details emerge.