Electronic Bulletin, January 2008, No. 5

Electronic Bulletin
Public Affairs Section, U.S. Consulate General, Hong Kong
January 2008, No. 5

(The Electronic Bulletin is an information service published by the Public Affairs Section of the U.S. Consulate General and provided to subscribers by e-mail and fax. Except for the U.S. Government sites, the opinions expressed on the Internet sites listed here do not necessarily represent the views of the U.S. Government.)

Investor and Industry Perspectives on Investment Advisers and Broker-Dealers
By: Angela Hung, Noreen Clancy, Jeff Dominitz, Eric Talley, Claude Berrebi, Farrukh Suvankulov
RAND Technical Report
January 3, 2008

This report is available online. (PDF file)*

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In theory, financial professionals are relatively distinct: A broker conducts transactions in securities on behalf of others; a dealer buys and sells securities for his or her own accounts; and an investment adviser provides advice to others regarding securities. Broker-dealers and investment advisers are subject to different regulatory structures. But trends in the financial services market since the early 1990s have blurred the boundaries between them. Regulatory reform requires a clearer understanding of the industry's complexities. The U.S. Securities and Exchange Commission asked RAND to conduct this study to examine the professionals' current business practices and whether investors understand differences between and relationships among them. The report describes a heterogeneous industry, with firms taking many different forms and offering a multitude of services and products and with investors failing to distinguish broker-dealers and investment advisers along regulatory lines. Despite this, investors express high levels of satisfaction with the services they receive from their own financial service providers. This satisfaction was much more frequently reported to arise from the personal attention the investor receives than from the actual financial returns arising from this relationship.

(Source: RAND Technical Report document information)

Subject: Global Economy