As the SEC dawdles and contemplates whether there should be a uniform fiduciary duty, Robert Ketchum, chairman and chief executive of FINRA, has recently laid down the gauntlet when he called for a cultural shift to where broker-dealers act in the best interests of their clients. Acting in the best interests of your clients is the common hallmark for a fiduciary duty.

Whenever I hear or see this “standard”, I always ask myself the following: Shouldn’t all broker-dealers act in the best interests of their clients. In my view, having defended broker-dealers and registered representatives for many years, the answer is a resounding yes.

It seems to me that many are stuck on labels as opposed to reality. The reality is that broker-dealers who do not act in the best interests of their clients will be a broker-dealer with no clients.

One area where broker-dealers can always improve is that having to do with conflicts of interest, particularly when the broker-dealer is selling a proprietary product. In those instances, you should do more to educate your client to make sure you know your customer and that the proposed investment is in that customer’s best interest.

People who are into labels may call this the “fiduciary duty”. I call it sound business practice.buyholdsell.jpg

A broker-dealer who acts in the best interest of its clients will likely have the benefit of many clients. What type of broker-dealer do you want to be?

* photo by freedigitalfotos.net