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Barry Ritholtz

SEC’s New ‘Best Interest’ Rule Is Far From Best for Investors

The brokerage industry has again skirted the need to put investors first.

Handing a win to brokers. 

Handing a win to brokers. 

Photographer: Joshua Roberts/Bloomberg

Corrected

There is much to be said for the fiduciary standard of care for investors, meaning that those in the business of selling investment advice and services put the interests of their customers first. It makes perfect sense that the people who buy financial services want a level of care closer to what a lawyer provides than a used-car salesman.

There now are two different standards of care for investors. Registered Investment Advisors (RIAs), or buy-side asset managers, must meet the fiduciary standard mentioned above.