Let's say you head to the emergency room with stomach pains. The doc in charge says, "Yep, you've got appendicitis. But I'm brutally tired, so...I recommend you go home." Odds are, if the doc himself had appendicitis, he'd get someone to take that puppy out, stat.
Acting Against Recommendations is kind like that—just in the financial world. If your broker tells you to do something he wouldn't recommend for his own investments, he has a duty to tell you that he wouldn't do that same thing in his own case.
Why would anyone act against recommendations? Well, in the case of the doc, maybe he is so tired that he's a dangerous menace in the O.R. In the case of the broker, maybe there's something about your specific situation that makes acting against recommendation the way to go. As long as they tell you, it's totally legit.
Related or Semi-related Video
Finance: What does it mean to have fiduc...51 Views
Finance a la Shmoop! What does it mean to have fiduciary obligation? Alright well
fiduciary refers to the responsible person, who has oversight, above a given
financial transaction, or process. That is, it is the fiduciary obligation, of the
head of a corporation's Audit Committee, to be certain that the
accounting process is handled fairly, objectively, inclusively and thoroughly [boss overseeing worker]
and there are a few other ly's in there, but well you get the gist. Doesn't it
seem strange, that some companies just seem to get into the same kind of
trouble again and again. Remember the BP oil spill, well it wasn't the first time
they'd had, an accident. You know, if you can call that spill only an accident.
What kind of oversight did they have? Any? Well some companies just have a [man carrying oil barrel
corporate culture that's run by the notion, that well, whatever isn't caught
as a crime, is legal. Lots of Wall Street stock brokerages came and went this
way. Yah, remember the Wolf of Wall Street? Kind of like that. Well what is
the obligation of a responsible party when faced with ethical dilemmas? Where
does the obligation start and stop? Should fiduciaries be held to a higher
personal standard than normal people? Yah, kind of the, you know, Harvey
Weinstein effect there. Yes, No, maybe, alright. Right, all three times. [question ABCD chart]
It's definitely yes, no, or maybe.
Up Next
What is Acting Against Recommendations? In the financial world, if an investor is acting against recommendations, they are not listening to a recom...
What is an Agency Relationship? An agency relationship allows an agent to act on behalf of the individual or company who hires them. This type of r...
What does it mean to be acting in concert? Acting in concert describes more than one party partaking in the same investment opportunity. Usually th...