“He's Not Unbiased, He's My Broker!”

Fee-based brokerage accounts protect the broker's clients. Really!

That was the theory, anyway. With an annual income assured, the broker would no longer have an incentive to churn the account in order to generate additional commissions.

The portfolio might be full of cats and dogs, but they wouldn't turn over so often.

But fee-based accounts seem to emphasize the broker's role as adviser rather than handler of transactions. Officially, brokers are presumed to offer only incidental advice. Yet as the survey described here indicates, many clients assume that advice-giving is the broker's primary function.

Would clients feel better if brokers offered unbiased advice, as registered advisers are expected to do?

Yes. According to the survey, more than nine out of ten believe advice-giving brokers and registered advisers should be held to the same standards.

What's more, “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.”