Cover -- Preface -- Contents -- Figures -- Tables -- Executive Summary -- Acknowledgments -- Abbreviations -- Chapter One - Introduction -- Background -- Purpose of the Study -- Approach -- Organization of This Report -- Chapter Two- Regulatory and Legal Background -- Regulation of Broker-Dealers -- Registration Requirements -- Suitability -- Reasonable Basis -- Prohibition of Excessive Markups -- Prohibition of Excessive Trading Activities -- Supervision of Registered Representatives -- Best Execution -- Record-Keeping Requirements -- Broker-Dealers and Fiduciary Duties -- Regulation of Investment Advisers -- Registration Requirements -- Fiduciary Duties -- Record-Keeping Requirements -- Other Requirements -- The Dividing Line Between Investment Advisers and Broker-Dealers -- Policy Response to Blurring of the Line -- Stakeholder Concerns with Proposed Changes -- Limited Investor Understanding -- Trends Blurring the Distinction Between Broker-Dealers and Investment Advisers -- Questionable Value of Disclosures -- Assessment of the Current Regulatory Structure -- Need for Greater Financial Literacy -- Conclusion -- Chapter Three- View of the Industry from Published Sources -- Characteristics of Firms -- Structure of the Financial Service Industry -- Other Firms -- Fee Structures Associated with Services -- Revenue Streams of Financial Service Firms -- Marketing of Financial Service Firms -- Disclosure Practices -- Internal-Monitoring and Compliance Practices -- Compensation Structures of Investment Professionals -- Investor Perceptions and Expectations of Financial Service Providers -- Conclusion -- Chapter Four- Insights from Industry Data -- Overview of Firms in the Data: 2001-2006 -- Investment Advisers -- Attributes of Investment Advisory Firms: Fourth Quarter of 2006.

Comparison of Investment Advisory Firms by Dual and Affiliated Activity Classification -- Broker-Dealers -- Attributes of Broker-Dealers: Fourth Quarter of 2006 -- Comparison of Brokerage Firms by Dual and Affiliated-Activity Classification -- Conclusions -- Chapter Five- Documentation and Information Provided by Firms -- Document-Collection Methodology -- Document Collection and Review -- Methodology for Firm Interviews -- Interview Approach -- Results from Document Collection, Web Data Collection, and Firm Interviews -- How Firms Interact with Clients -- How Firms Provide Services and Affiliate with Other Firms -- What Firms Disclose About Their Services and Affiliations with Others -- Firms' Perspectives on Policy Issues -- Broker-Dealers from the Volunteer Sample -- Illustrative Examples -- Investment Advisers in the Registered-Representative Classification -- Broker-Dealers in the Affiliated-Activity Classification -- Conclusions -- Chapter Six- Investors' Level of Understanding -- Household Survey -- Investment Experience -- Beliefs About the Differences Between Investment Advisers and Brokers -- Characteristics of Respondents Who Use Financial Service Providers -- Job Titles and Firm Types of Financial Service Providers -- Reasons Not to Use a Financial Service Provider -- Relative Inclination to Seek Services from Brokers or Investment Advisers -- Types of Assistance That Respondents Would Like with Financial Matters -- Focus Groups -- Methods -- Investment Experience -- General Impressions of the Financial Service Industry -- Investor Decisionmaking and Experience with Financial Service Professionals -- Perceived Differences Between Investment Advisers and Brokers -- Differences Between the Experienced and Inexperienced Groups -- Other Comments -- Conclusion -- Chapter Seven- Conclusions.

What Are the Current Business Practices of Broker-Dealers and InvestmentAdvisers? -- Do Investors Understand the Differences Between and Relationships AmongBroker-Dealers and Investment Advisers? -- APPENDIX A- Descriptions of Regulatory Filings, Data Sets, and Use of the Datato Identify Dual and Affiliate Activity -- Investment Advisers: Form ADV Data -- Broker-Dealers: Form BD and FOCUS Report Data -- Identification of Firms Engaged in Dual or Affiliated Broker-Dealer andInvestment Advisory Activity -- APPENDIX B- Other Retail Providers of Financial Services -- Mutual Fund Direct Purchase -- Services by Banks -- Services by Accountants -- APPENDIX C- Attributes of Investment Advisers and Broker-Dealers -- APPENDIX D- Additional Detail on Sampling Method of Document Collection -- Document Collection and Review -- APPENDIX E- Disclosures by Type and Information Source -- APPENDIX F- American Life Panel -- APPENDIX G- Detailed Results of Household Survey and Focus Groups -- APPENDIX H- Supplemental Analysis of Industry Data from 2001 to 2006 -- Investment Advisers -- Broker-Dealers -- References.