Ah, Spring, that eternal season of baseball, Easter and turning one's heart to … budget poker? For those without a scorecard, here's the quick recap:
Seventy years ago, Congress passed the Investment Advisers Act of 1940 ("40 Act"). The 40 Act requires anyone (other than banks) providing investment advice to act under the fiduciary standard (as in "the client comes first). This leveled the playing field between banks (whose investment advising trust departments long ago fell under the fiduciary standard) and those (referred to as "Registered Investment Advisers" or "RIAs") who offered investment advice outside the bank trust model.
Since then, new financial services industries, finding loopholes in the 40 Act (q.v., "Merrill Lynch Rule") or finding themselves regulated by others (q.v., the insurance industry), discovered they could nose their way into the highly lucrative investment advisory – (called "advisory" since the "e" applies only to those operating under the 40 Act) – without regard to the fiduciary standard. Unlike RIAs, these advisors follow the less restrictive "suitability standard" (as in "anything but the fiduciary standard").
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