Brokers or Investment Advisers? The US Public Perception

Abstract

We find that individuals are confused by the titles used by investment professionals and cannot distinguish between investment advisers and brokers. This confusion persists even among those with investment industry experience, a college degree, or a high level of perceived knowledge (one’s self-assessment or feeling of knowing the information). Surveyed individuals better identified the brokerage responsibilities of “an investment sales representative” (an alternate title for broker) than the more ambiguous titles brokers often use, such as “financial advisor.”

Disclosure: One of the authors, Patrick Lach, owns and operates an independent investment advisory firm.

Editor’s Note

Submitted 17 January 2019

Accepted 13 March 2019 by Stephen J. Brown

Notes

¹ A description of Qualtrics can be found at www.qualtrics.com.

² The Rules of Conduct can be found at www.cfp.net/for-cfp-professionals/professional-standards-enforcement/current-standards-of-professional-conduct/standards-of-professional-conduct/rules-of-conduct.

³ To get an idea of the percentage of CFP certificants registered as brokers, we analyzed all those designated CFP certificants within a 25-mile radius of Mississippi’s state capital in Jackson. This search yielded 43 practitioners, 32 of whom were registered as brokers.

⁴ The press release, which contains a link to the approved code of ethics, can be found in CFP Board (2018).