Brokers would be required to recommend the “best of the reasonably available options” when opening accounts, transferring assets, suggesting an investment strategy or recommending that clients buy investments and products.
Failure to adhere to a fiduciary standard for investment advice would be considered a “dishonest or unethical business practice” under the new regulation.
While the New Jersey Bureau of Securities acknowledged that the new regulation will have an impact on brokers, that impact should be tempered somewhat because “to the extent broker-dealers have already implemented changes to comply with the now vacated DOL Fiduciary Rule, the economic impact associated with the bureau's proposed new rule will be reduced,” the bureau stated.
Any additional costs to financial advisors, however, are “outweighed” by the need to protect investors, according to the agency.
More stringent fiduciary regulations have also been proposed and/or enacted in Nevada, Maryland, New York and Illinois.