Fiduciary Standard for Giving Investment Advice
On the Web site of the brokerage firm Edward Jones (www.edwardjones.com), under the information and accolades about the company and its investment insights, you'll find the words "Revenue Sharing Information" near the left-hand corner of the home page.
If you click on the link to related pages and wade through the legalese, you'll learn that "product partners" paid
"Product partners" are companies that pay
In plain English: When Edward Jones brokers recommend a product, you can't be sure it's because it's best for you or best for them.
To be fair,
Fiduciary standard means putting clients' interests first, as registered investment advisers are legally required to do. Brokers generally are held to a less strict "suitability" standard, meaning recommendations must be suitable to the client but don't have to be the best for them.
There is "really no dispute" that the fiduciary standard is higher, said Mercer Bullard, professor of securities law at the
"Investors rarely research recommendations they receive from trusted advisers, and may not realize the so-called advice is tainted, or that there are better alternatives," such as lower-cost funds, said
A fiduciary standard "would also provide meaningful investor protection" in the sale of variable annuities, said
"To us, it's just common sense" about applying the fiduciary standard to all advisers, said
Investing - Fiduciary Standard for Giving Investment Advice
(c) 2010 Humberto Cruz