Brokers and Investment Advisers Standards of Conduct: Suitability vs. Fiduciary Duty

Abstract

This paper examines the “suitability rule” and related duties of securities brokers with respect to their customer recommendations in comparison with similar duties of investment advisers. This paper also discusses the standards of care owed by trustees under the Uniform Prudent Investor Act as a possible guide for brokers and investment advisers who owe a duty to act in the "best interest" of their clients both under existing law and any new regime adopted as a result of the Dodd-Frank Act.

Keywords: Broker, Investment Adviser, Fiduciary, Suitability, Best Interest, Standard of Care, FINRA Rule 2111, NASD Rule 2310, Uniform Prudent Investor Act, Prudent Investor Rule, Fiduciary, Duty of Fair Dealing, Dodd-Frank, SEC