Fiduciary Duty for Broker-Dealers
The SEC under the purview of the Dodd-Frank legislation is empowered to impose fiduciary standards on broker-dealers who give investment advice. Currently, brokers are held to suitability standards.

"They can recommend investment choices for clients, but they don't have to recommend investment actions that are in the best interest of the client," says Yuval Bar-Or, Ph.D., founder and president of the Light Brigade.

Meanwhile, the fiduciary standard to which investment advisers are held, "means, by law, they are required to always do what is in the best interest of their clients," says Bar-Or.

The SEC must study the issue for six months before issuing a ruling on it, an unnecessary delay, say consumer advocates.

"The elements that the study is meant to address should be apparent to people by now. It's important for consumers to realize that legislators have passed the buck to the SEC," Bar-Or says.

Among the issues being reviewed by the SEC are the existing standards and how effective they are at protecting retail investors, and whether those investors understand the differences between brokers and investment advisers.

"Studies have already taken place which established that people don't know what the difference is," says Bar-Or.

FDIC Insurance Limits

In October 2008, the FDIC insurance limit was raised to $250,000 as a temporary measure during the financial crisis. According to the new legislation, it will now be the permanent level of deposit insurance available to consumers. As before, the insurance limits are per person, per institution.

The insurance limit at thrifts and credit unions was also increased to $250,000.

The increase is retroactive to Jan. 1, 2008, so depositors who lost money at the banks that failed before the limit was raised, including the infamous IndyMac, will be reimbursed for money they were unable to recover at the time.

"The fact that the $250,000 limit is now in effect permanently removes any uncertainty consumers might have, particularly with money invested in longer-term CDs that would have matured after the December 2013 time frame. Now investors can rest easy knowing the $250,000 limit is in effect," says Greg McBride, Bankrate.com's senior financial analyst.

There are ways to get more than $250,000 of deposit insurance. With different types of ownership registrations, a couple could insure quite a bit at one institution. For instance, two individual accounts and one joint account will be insured up to $1 million.

More Investor Resources

Whether the new rules will make a dramatic difference in the lives of investors remains to be seen. But you can always protect your own interests by staying current on developments concerning your investments.

 

Copyright 2010, Bankrate Inc.