Critics of a fiduciary standard for stockbrokers beware: A study released in early March suggests that application of a fiduciary standard to the broker/dealer model wouldn’t have the terrible consequences for lower-income clients that critics have said it would. The authors compared stockbrokers who work in four states that already impose a strict fiduciary standard on them to stockbrokers who work in states that do not.

If you are reading this, you probably know that today financial advice provided by investment advisers is subject to the fiduciary standard, which requires them to put client interests first. Financial advice provided by stockbrokers and broker/dealers generally falls under the suitability standard, which requires them to recommend suitable products to clients, but permits them to select ones that will compensate them more richly even when a better, cheaper product is available.

Those who argue against extending the fiduciary standard to broker/dealers have said it would jack up the cost of doing business by increasing liability, making financial advice prohibitively expensive for everyone but the wealthy. They have also said it would make it untenable to sell certain kinds of products—mostly commission-based securities.

In a report titled “The Impact of the Broker-Dealer Fiduciary Standard on Financial Advice,” Michael Finke of Texas Tech University and Thomas Langdon of Roger Williams University took a hard look at broker/dealers and stockbrokers operating in four states that already impose an “unambiguous” fiduciary standard on them—California, Missouri, South Dakota and South Carolina—and compared them to those who operate in states that don’t have such requirements—Arizona, Arkansas, Colorado, Hawaii, Massachusetts, Minnesota, Mississippi, Montana, New York, North Carolina, North Dakota, Oregon, Washington and Wisconsin. (I confess, I was not aware that there were four states that already applied the fiduciary standard to stockbrokers and broker/dealers.)

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(Read more from Features Editor, Kristen French on her blog, Due Diligence.)