Senator Dodd is going to introduce financial reform legislation soon, and he will be excluding the provision that dictates brokers act as fiduciaries for their clients. While most Americans have no idea what a fiduciary is or that their broker is not putting their interest first, this hurts consumers. This means that Wall Street will continue to be held to the standard of a salesman – known as the suitability standard. I discussed this issue in “Will Fiduciary Oath Become Reality.”
It always amazed me why the brokerage world seemed to embrace the idea of a fiduciary standard. It would have had an impact on their investment banks, in-house products, and blatant conflicts of interest. It turns out they probably publicly endorsed it because they knew they could kill it privately. Now, they can sit back and say, “we wanted the fiduciary standard.” Of course, I plan to watch Senator Dodd’s life after he leaves the Senate in 2011. I expect a position on the board of a prestigious bank or Wall Street firm – after the required rule about working for companies that had legislation in front of the Senator expires.
If you think that Wall Street should put your interest first, you need to contact Chris Dodd’s office and tell him to include the fiduciary standard in the reform legislation. Here is his contact information:
U.S. Senator Chris Dodd
448 Russell Building | Washington D.C., 20510
Tel: (202) 224-2823 | Fax: (202) 224-1083