A recent survey conducted by TD Ameritrade Institutional found that 62% of new advisor investment assets are coming from traditional brokerage firms (you know the ones). Investors are looking for alternatives to the heavily product oriented framework at these brokers. While this is good news for firms like ours that render independent advice, the real question is why has it taken so long for investors to figure out that these brokers can be dangerous to their financial health?

The survey contends that investors move because of dissatisfaction with fees (read commissions), service, advice and performance at full service brokerage firms. They seek a more personalized approach and competitive (transparent) fee structure. On the heels of this study, the Securities and Exchange Commission (S.E.C.) released a study recommending a common fiduciary standard for brokers and advisors (I pushed for this almost 20 years ago when I served on the Board of Governors of our national credentialing organization). The proposal could still be scuttled as the large broker dealers employ powerful lobbyists who will argue this will be more "expensive" for consumers. No, what is expensive is being sold a product when you (mistakenly) thought you were receiving advice.

Part of what constitutes fiduciary duty in this context is a duty to protect. Brokers have no such duty but instead have a duty not to defraud investors which obviously is a much lower bar. As we often say "we have clients and brokers have customers".

Of course the overarching problem is that investors overwhelmingly focus on the mechanics of investing (specific stocks, funds, bonds etc), the "how", instead of "what" it is they are attempting to accomplish with the investments. That provides the easy access for brokers and others who aren't advisors to take investors off the appropriate path.