"Fiduciary" - Watch Out, this Could be Big for Brokerages

I just read a mention in a crain's piece (print) where it noted that Obama's financial overhaul language includes fiduciary responsibility for brokers. Now, I don't know how true it is, I'm going to do some digging... but this is huuuuuuuge for the financial world if it happens. In short, the banks lobbied congress to remove all responsibility to give good advice to their clients that, well, the... [more]

I just read a mention in a crain's piece (print) where it noted that Obama's financial overhaul language includes fiduciary responsibility for brokers. Now, I don't know how true it is, I'm going to do some digging... but this is huuuuuuuge for the financial world if it happens. In short, the banks lobbied congress to remove all responsibility to give good advice to their clients that, well, the rest of the world has to do. Imagine a doctor who doesn't give you the bypass you need, but instead sells you a lobotomy because it will make him more money. This, up until now, has been legal for the brokerages. This is why the broker sells you only the funds for his company, or the ones with big commissions, etc. The only rule they have is "suitability", which just means you can't sell the old lady call options for all of her portfolio, you ca do that with 10% of her money, and then put her in a variable annuity with a 50% commission for the rest. If the language changes, watch the F out. This could mean the end of some of the crazy internal commissions, and big areas of profit for brokerages. Not saying its happening, just something to watch. Its a game-changes for the 700k or so brokers out there. [less]