SEC Says 'Yes' to Brokers as Unregistered Investment Advisors

April 6, 2005 ( - Federal securities regulators unanimously voted Wednesday to allow Wall Street investment brokers to keep hawking investment advice without having to become registered investment advisors.

>The measure approved by the US Securities and Exchange Commission (SEC) limits the kind of advice broker-advisors may offer and calls for more study of how those services are marketed to the public, Reuters reported.

Research on the rule revealed investor confusion about the obligations of brokers, advisors, planners, consultants and others offering financial services, the SEC said. “Investors should understand the differences between brokerage and advisory accounts,” Commissioner Cynthia Glassman said at an open meeting commission meeting.

The measure approved by the commission has been opposed by independent investment advisors who argue that brokerage advisors are really just salesmen.

Brokers who tend these investment accounts are often held out to the public as advisors. But independent advisors, who must register with the SEC, complain that brokerage-affiliated advisers shouldn’t be able to portray themselves as putting clients’ interests foremost.

Brokerages say their advisors already follow a strict code of rules and don’t need to register like independent advisors.