The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Banking

Investor protection: New rules threaten traditional brokerage model

Dodd-Frank Act US fiduciary standard hits brokers; Costs likely to increase for issuers and investors

As the SEC’s comment period for the Dodd-Frank regulation that seeks to make investment advisory a level playing field draws to a close, the future of traditional brokerage models in the US looks set to change.

According to a survey released in September by a group of consumer organizations in the US, more than two-thirds of individual investors believe they receive the same quality of advice from a broker as they would from a registered investment adviser. They are lucky if they do.

Different standards

The fiduciary standard that at present applies to registered investment advisers ensures that clients’ interests are put first at all times, that all advice must be transparent, expenses are to be controlled and fees and costs are fully disclosed.

Brokers have only had to comply with a "suitability standard". Often called "financial advisers" – a term that fudges the distinction with the more tightly regulated investment advisers – brokers need only disclose conflicts of interest, but do not have to avoid them, and do not have to seek the best pricing for investors.

The new regulation seeks to ensure that brokers and investment advisers adhere to the same "fiduciary standard".

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree