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One response to “Stunning Academic Study May Cause DOL to Retain Original Proposal for Fiduciary Definition”

  1. Stephen Winks


    As you know I have long maintained that fiduciary counsel is faster, better and cheaper than commission sales but not for the reasons cited in the Texas Tech/Harvard study that is based on a fundamentally flawed thesis.

    The disagreement is the presumption that brokers fulfill their fiduciary duties in states that require fiduciary duty while they don’t in states where fiduciary duty is not required. The reason why there is no difference in client service/cost in fiduciary/non-fiduciary states is that no brokerage firm in the US assumes fiduciary liability for all the recommendations of all their brokers as required for fiduciary standing. The conclusion that fiduciary standing cost no more based on the Texas Tech/Harvard methodology is irrelevent as in neither instance is fiduciary duty being fulfilled.

    It is a violation of the internal compliance protocol of every US brokerage firm for brokers to acknowledge they render advice or have an ongoing fiduciary duty to act in their client’s best interest in fulfilling their fiduciary duties. While that would be most desirable public policy, denying brokers render advice is the brokerage industry’s principle defense against assuming fiduciary responsibility for every recommendation every broker makes.

    The reason why fiduciary counsel is less expensive and far superior than commission sales becomes self evident in a detailed analysis of both, as previously discussed. Let’s not perpetuate the thought that brokers act in a fiduciary capacity. They do so only by rare exception. Arbitration proceedings to manage client disputes are based on the thesis that brokers are neither accountable for their recommendations nor are responsible for ongoing fiduties.


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