Stockbrokers in the market do not all owe a fiduciary duty to their clients. A fiduciary duty, as listed in the Investment Advisors Act of 1940 calls upon investment advisors to act with the highest standard of care. It’s difficult for investors to tell when their stock broker owes them a fiduciary duty and even what having a duty owed to them would translate to. Investing with a financial professional who can be trusted to offer sage investment advice while also placing clients interests above their own is what any investor would want. But generally, what most investors discover if they ever consider filing a lawsuit or securities arbitration claim against their stockbroker for a stock market fraud claim of any kind, is that many investment professionals do not technically owe a fiduciary duty to their clients. What the stock brokers title is, which would seem like a small consideration when deciding who to invest with and use for professional wealth management is of critical importance.
Different Stockbroker Titles
When investors start looking to place money into the markets they are generally confronted with a barrage of titles stock brokers carry. Broker, Stockbroker, Investment Advisor, registered representative, account executive, financial advisor, portfolio management specialist, and on and on. What is important to understand and what few investors know before plunging into the world of professional wealth management, is that whether a broker truly owes a fiduciary duty of placing a clients interests before their own depends on a number of factors. Stock brokers making recommendations for a certain stock or bond alone, is not generally enough for a stock broker to be considered a customers fiduciary.