Investment Management Newsflashes

Survey Says Investors Want Same Rules for Advisers and Brokers

A recent survey conducted by research firm Penn, Schoen & Berland Associates and released by TD Waterhouse found that investors don't understand the difference between brokers and financial advisers. According to the study, investors are concerned that both can offer financial advice without being subject to the same rules, and 90 percent of those surveyed want Congress to step in and set uniform standards of protection for stockbrokers and investment advisers who provide fee-based financial advice.

Release of the findings comes as the issue returns to the front burner at the SEC. In 1999, the agency proposed allowing brokers to offer fee-based financial advice without providing the same investor protections as the Investment Advisors Act of 1940. As a result, stockbrokers and investment advisers are both offering fee-based financial advisory services, but are subject to different regulations and therefore provide unequal levels of investor protection.

The survey uncovered the points of confusion: 58 percent incorrectly believe both stockbrokers and investment advisers are required to act in the investor's best interests in all aspects of the financial relationship; 63 percent incorrectly believe both stockbrokers and investment advisers are required to disclose all conflicts of interest prior to providing financial advice; 81 percent are either very concerned or concerned that both stockbrokers and investment advisers provide fee-based advice yet offer unequal levels of investor protection; and 94 percent believe financial professionals that offer fee-based advice should be required to adhere to the same industry regulations.

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