A new Securities and Exchange Commission regulation will require financial broker-dealers in Pennsylvania and around the country to raise the bar of ethics and legal standards when working with their clients. Brokers must consider the needs and benefits of their account holders before they contemplate their own. They will be required to sell investment products that bring a greater financial benefit to their client base rather than a higher commission.
Enforced and regulated by FINRA, advisors must disclose their fees, how they receive payment and whether they have ever been disciplined in their professional career. Many have praised this financial regulation for the protection it will provide to consumers. However, others feel as though the decision does not go far enough.
The previous standard of care for clients only required brokers to sell products that produced some financial benefits for account holders. The passage of the new regulation places a stricter obligation for the broker to sell securities, or other financial products, that are the best options for their customers.
Another important aspect of this new regulation is that it requires brokers to no longer refer to themselves as financial advisors. Brokerage houses have traditionally encouraged brokers to claim the title of advisor in order to increase confidence with investors. Since advisors are held to a higher fiduciary standard, brokers must now disclose their true professional designation.
For those who have worked with broker-dealer firms in the past, differences should be noticed with future transactions. Trading and purchasing financial products should be much more transparent and beneficial if the firm is following revised guidelines. However, those who have been taken advantage of by disreputable firms might consider consulting an experienced FINRA law attorney. The attorney may work as an advocate to protect the rights of investors and their finances.