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Investment Professionals and Fiduciary Duties

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Overview

The distinction between the role of a broker and the role of an investment adviser may seem clear to those within the profession but not necessarily to their clients. Investment advisers are classified as fiduciaries who must act in the best interests of their clients. Brokers are not fiduciaries. That distinction survived and enjoyed regulatory allowances until the 1980s. However, over the past 30 years, the distinction between these two roles has become increasingly blurred. This blurring of the roles—in addition to investor losses and increased regulatory activity—has led the profession and the investment industry to a crossroads in terms of the nature of the roles investment professionals play and the standards to which they will be held.

About the Author(s)

Marianne M. Jennings

Marianne M. Jennings is a member of the department of management in the W.P. Carey School of Business at Arizona State University and is a professor of legal and ethical studies in business. She has written several books — including Business Strategy for the Political Arena and The Seven Signs of Ethical Collapse — as well as numerous award-winning articles for publications such as the Wall Street Journal. Professor Jennings is a contributing editor for several publications and serves on the editorial board of the Financial Analysts Journal. She holds an undergraduate degree in finance and a JD degree from Brigham Young University.