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Proposed regulations to expand fiduciary duties among brokers

If you have ever utilized the services of a financial advisor, you likely assumed that he or she was acting in your best interests when recommending investments. But in certain cases, financial advisors will direct their clients to invest their money in ways that are designed to offer benefits to the advisors rather than their clients.

In regard to offering investment advice, giving top priority to a client's best interest is known as the fiduciary standard. But heretofore, not all financial advisors have been required to adhere to this standard. And among the clientele for some these advisors are those who are taking personal control of their 401(k) plans.

Typically, people have their 401(k) plans set up through their employers. And employers have a fiduciary duty to act in the best interests of their employees. However, once a worker retires, he or she can assume responsibility for the account. To get help managing an account, a retiree may seek advice from a broker, who in turn recommends excessively risky investments. The broker does this because he or she will be given a commission from the entity that receives the retiree's investment.

Fortunately, there are new regulations that may soon go into effect requiring all brokers to act in the best interests of investors. If and when these regulations are in place, it will remove the conflict of interest that can lead brokers to provide ill-advised recommendations. These regulations are aimed at protecting investors.

And while to date, not all financial advisors are required to meet the fiduciary standard, many brokers and employers must act in a client's best interest. If you believe that your broker or employer did not adhere to his or her fiduciary duties, which resulted in you suffering an economic loss, you may wish to contact a business litigation attorney. The attorney could assess the legal responsibilities of the party handling your assets and help you take legal action if there is evidence those assets were improperly managed.

Source: Yahoo! Finance, "It's about to get much harder for financial advisors to give bad advice," Mandi Woodruff, Mar. 25, 2016

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