More than 90% of investors surveyed believe that the same investor protection rules should apply to both stockbrokers and financial planners when they offer the same kind of investment advice services, according to a new study.
More than 90% of investors surveyed believe that the same investor protection rules should apply to both stockbrokers and financial planners when they offer the same kind of investment advice services, according to a new study.
The survey was conducted by the Zero Alpha Group and the Consumer Federation of America.
Fewer than one out of three U.S. investors correctly understand that the "primary service" provided by stockbrokers is the buying and selling of stocks, mutual funds, bonds, etc. -- not investment advice, the survey found.
Although stockbrokers are salespeople, a majority of surveyed investors look to stockbrokers for more than transactional assistance, with 29% saying that financial advice is the "primary" service offered by stockbrokers and 25% saying advice and transaction assistance are equally important services provided by stockbrokers.
Additionally, 90% think a stockbroker should be required to disclose prior to an investor purchasing an investment product (such as a mutual fund) any incentives or other forms of compensation (such as cash payments, vacations, etc.) that the broker is receiving some form of inducement to push the investment product on his or her customers.
The Zero Alpha Group is an international network of independent investment advisory firms that manage a total of more than $7 billion in assets.
The Consumer Federation of America is a non-profit association of approximately 300 organizations.
The ZAG/CFA survey was conducted by Opinion Research Corporation among 1,073 adults who described themselves as investors.
