"You Mean They Can STILL Screw Their Clients??"

"Cruel Kindness" -- and Vice Versa

Cruel to be kind in the right measure
Cruel to be kind it's a very good sign
Cruel to be kind means that I love you
Baby, got to be cruel, you got to be cruel to be kind

--Nick Lowe; lyrics, "Cruel to Be Kind"

Which of the following professionals have a legal duty to put their customers' interests ahead of their own?

A. Stock Broker
B. Insurance Agent
C. Realtor
D. Investment Banker

Answer: C

That's right: only Realtors owe their clients what is called a fiduciary duty.

That duty further subdivides into a duty of care, and a duty of loyalty: in plain English, don't be a screw-up, and don't screw your client, respectively.

The issue of fiduciary duty is a hot one these days because stock brokers don't currently owe their clients a fiduciary duty -- and don't want the details of the new financial reform legislation, now being drafted, to impose one ("Dear SEC: Please Make Brokers Accountable to Customers"; The NYT, 11/19/2010).

Instead, stock brokers prefer the current standard, which merely requires that they weigh the "suitability" of particular investments for their clients.

Incredibly, the industry is arguing against a higher fiduciary duty on the grounds that it will raise costs, which will hurt clients.

So, there you have it: allowing brokers to screw their clients is actually good for them, and preventing that is bad.