Advisers, Brokers, and Online Platforms: How a Uniform Fiduciary Duty Will Better Serve Investors

Smith, Alec

The differences between Investment Advisers and Brokers have long confused retail investors. Despite different governing statutes, many investors are still left wondering as to which services each provides and to which legal standard they are subject. Adding to this problem has been the rise of online and mobile platforms for investing that offer many of the same services and compensation structures as Advisers and Brokers, yet subject investors to a third distinct level of legal protection. This Note identifies the problems inherent in the current system and explores several possible solutions that could reduce consumer confusion and potential investor harm with minimal impact on market efficiency. In the end, this Note identifies the need for new legislation governing all financial advisers, which creates a unified fiduciary standard across all three forms of financial adviser as the optimal solution. This Note illustrates the precedent for such an extension of fiduciary obligations as well as how this standard must be tailored to best balance the interests of both investors and financial advisers.

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Columbia Business Law Review

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November 26, 2019