Broker & Adviser Education: What Does the Public Know?

The United States recently increased the standard of care for brokers but still requires no formal education for investment professionals. This study investigates the public expectation of the educational requirements of investment professionals. While no formal education is required to become a broker or investment adviser, a majority of the survey respondents in this study believed investment professionals must have a college or graduate degree. This finding is noteworthy as research has indicated that consumers are likely to curtail a search if they believe all available alternatives are relatively homogeneous. Furthermore, a majority of respondents indicated brokers and investment advisers should have a college or graduate degree. Female participants, younger participants, and those with low perceived knowledge most frequently overestimated the required education of brokers and/or investment advisers. Respondents demonstrated an increased preference for investment advisers relative to brokers after being educated on the difference between the groups.