Investors Badly Confused About Advisory Role of Brokers and Financial Planners

January 2005
Journal of Financial Planning;Jan2005, Vol. 18 Issue 1, p19
Academic Journal
This article presents the results of two surveys illustrating the confusion of investors over the advisory roles of brokers and financial planners. According to a survey by the Consumer Federation and the Zero Alpha Group, which is a network of financial advisory firms, 53 percent of investors believe that offering financial advice is either as important as offering transaction help or is the primary service of stockbrokers. Yet TD Waterhouse Institutional Services, which supports the Financial Planning Association's fight against the U.S. Security and Exchange Commission's proposed adoption of the Merrill Lynch rule, found that 84 percent of investors believe that stockbrokers and fee-based investment advisors are subject to the same industry-regulations, though of course they are not. The Alpha Group/Consumer Federation survey found that 91 percent of respondents think that stockbrokers and financial planners should have to follow the same investor protection rules if they provide the same kind of investment advice services. The TD Waterhouse survey also found that 85 percent of investors would not seek financial advice from a stockbroker if they knew stockbrokers provided fewer protections than investment advisors, such as disclosure of conflicts of interest and the requirement that they act in the best interest of the investor.


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