Wall Street may soon be refurbished as the SEC continues to push for brokers adhering to a universal fiduciary standard. This is due largely in part to a recent study by the SEC on Investment Advisers and Broker-Dealers that was required by the Dodd-Frank Wall St. Reform and Consumer Protection Act. That means that brokers would have to put the interests of the client first. Right now only investment advisers have to hold fast to that standard and the broker just has to make sure the investment is “suitable”. So many investors think if they go to the big firms they are protected but on the contrary, bigger isn’t always better. It just means that much more red tape you have to sift through until you realize that you’re being overcharged for at best, mediocre results that often put more money in your broker’s pocket than your own. Something we have always said is- the brokers’ interests and the firms interests are always put ahead of the client’s interest in larger firms.

“I believe big Wall Street firms will always put their best interest and pocketbooks ahead of their clients…”

Unfortunately too many investors either have no idea or for some reason really don’t care about the issue of whether their broker is acting in their best interest or not. So many investors want to solely blame Wall Street for their poor investment performance. While I believe big Wall Street firms will always put their best interest and pocketbooks ahead of their clients, investors need to take a harder look in the mirror at times to shoulder some of the blame. Case in point- why would an investor ever opt to work with a broker who legally does not have to put their client’s best interest first, when there are so many independent advisors who legally have to act in the best interest of their clients? So again the investor needs to really understand who they are entrusting their financial future to before blindly thinking big Wall Street firms really care about them.

It’s about time some guidelines were put in place after these major firms continue to rip off investors with excessive fees for the products they offer. What is shocking though is that the vast majority of investors working with a financial advisor don’t even know that their advisor is not putting their best interest ahead of their broker dealer or firm they work for. In my opinion it only makes sense to work with a Registered Investment Advisor since they have to adhere to a fiduciary standard.

This issue has been ongoing for years and certainly won’t get settled anytime soon, but upcoming legislation points out that brokers need to shape up and start focusing more on the client as opposed to their own pocket, something true advisors and wealth managers have always done!