NEW YORK, Aug. 30 /PRNewswire-FirstCall/ -- In a nationwide survey of
registered investment advisors (RIAs) released today, 92 percent of
respondents agreed that all providers of fee-based advice should offer equal
levels of protection to investors. To achieve this, the vast majority of
respondents support reforms such as creating new legislation as well as
eliminating or modifying the broker-dealer exemption.
(Photo: http://www.newscom.com/cgi-bin/prnh/20050830/NYTU117 )
Additionally, 95 percent of the RIAs surveyed agreed the rule, adopted
earlier this year by the Securities and Exchange Commission (SEC), will be
harmful to investors and 86 percent believe it will reduce investor
confidence.
In April, the SEC adopted a final rule (12 CFR 275.202 (a)(11) -- known as
the Broker-Dealer exemption) that allows certain broker-dealers to offer
fee-based investment advice without complying with fiduciary and disclosure
standards in the Investment Advisers Act of 1940. Upon adopting the final
rule, the SEC acknowledged the rulemaking "raised a number of important issues,
implicating policy concerns well beyond the scope of this rulemaking." As a
result, a unanimous Commission requested that SEC staff report back within 90
days on further steps that can be taken to address investor protection
concerns.
"At a time when we need to be boosting investor confidence in markets,
this new rule creates more confusion for investors and leads to greater
uncertainty about who consumers can trust for investment advice," said Tom
Bradley, president of TD Waterhouse Institutional Services. "With more and
more brokerage houses aggressively marketing fee-based 'advisory and planning'
accounts, investors are increasingly at risk."
When asked whether they agreed that further reform of the broker-dealer
exemption was necessary, 88 percent of RIA respondents indicated it was needed
to provide equal protections for investors. Specifically, 82 percent support
new Congressional legislation that sets forth one clear, uniform standard of
investor protection for all providers of fee-based financial advice.
The TD Waterhouse survey also found that 82 percent of RIAs responding
agree that fiduciary and disclosure requirements are important to their
clients, and 70 percent say that the enhanced protections offered by RIAs
gives them a competitive advantage over broker-dealers. Even so, 88 percent
of RIAs surveyed support further reform of the rule to ensure investors
receive equal protections from all financial professionals offering fee-based
financial advice.
RIAs surveyed believe that investors are both confused and concerned about
the unequal levels of investor protection provided by broker-dealers and RIAs
for the same fee-based advice services.
"This survey clearly underscores that RIAs are solidly on the side of the
investor. They realize that what's best for investors is what's best for the
health of the financial services industry," said Bradley. "There's a clear
message here to do the right thing for investors."
Another survey conducted by TD Waterhouse last fall of 1,000 investors who
own stocks, bonds or mutual funds affirmed the RIA's assertion about investor
confusion and concern. In that survey, released in November 2004, prior to
the finalization of the new rule, 58 percent of investor respondents
incorrectly believed that both stockbrokers and investment advisers have a
fiduciary responsibility to act in the investor's best interests in all
aspects of the financial relationship.
Additionally, 83 percent of investors surveyed expressed concern about the
different levels of protection, and 86 percent said their choice of a
financial professional would be affected if they understood there were unequal
levels of protection being offered by RIAs and broker-dealers.
"With the recent emphasis by many retail brokerage firms on promoting
fee-based advice services, we believe it is critical for this policy issue to
be addressed quickly, and we will support further regulatory and legislative
reform of this rule for the benefit of investors," Bradley said.
Survey Methodology
TD Waterhouse Investment Services contracted with Competitive Insights, a
Chicago-based market research firm, to conduct an online survey of 2,903
registered investment advisors, some of whom use TD Waterhouse as a custodian.
An online questionnaire was sent out on July 12, 2005 and a total of 276
responses (9.5 percent) were received by July 19 from advisors who were aware
of the broker-dealer rule and completed the entire survey.
About TD Waterhouse
TD Waterhouse Group, Inc., provides investors and financial advisors with
a broad range of brokerage, mutual fund, banking, and other consumer financial
products. Worldwide, TD Waterhouse currently has 3.2 million active customer
accounts. TD Waterhouse is a wholly-owned subsidiary of The Toronto-Dominion
Bank (NYSE/TSE: TD) and part of TD Bank Financial Group. For more information
please visit http://www.tdwaterhouse.com
SOURCE TD Waterhouse
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Related links:
http://www.tdwaterhouse.com
Photo Notes:
NewsCom:
http://www.newscom.com/cgi-bin/prnh/20050830/NYTU117
AP Archive: http://photoarchive.ap.org
PRN Photo Desk, photodesk@prnewswire.com
Company News On-Call:
http://www.prnewswire.com/comp/959635.html
CONTACT:
Diana DeSocio of TD Waterhouse,
+1-212-806-5342, dianadesocio@tdwaterhouse.com
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