Jason Zweig points to research on the topic:
My column this weekend points out that in an online survey of nearly 500 investors last month, 51% said — incorrectly — that brokers must always act as fiduciaries. Only 44% correctly said that about investment advisers.
The survey was co-directed by Patrick Lach, a finance professor at Eastern Illinois University and a registered investment adviser, along with marketing professor Leisa Flynn and finance professor G. Wayne Kelly of the University of Southern Mississippi.
Nearly a sixth of the survey participants work or used to work in the investment business — but, says Mr. Lach, it is “alarming” that they were wrong nearly as often as the general public about which financial professionals have a fiduciary duty. The difference between the general public and people with investment-industry experience in answering those questions correctly was tiny and statistically insignificant.
“The people who are already handling investments can’t even identify who is a fiduciary and who isn’t,” says Mr. Lach. “How the heck can we expect a schoolteacher or fireman or physician to do it?”
The professors write in their paper: “In most states, the minimum level of education needed to become a broker or an investment adviser is lower than the education requirement needed to become a hairdresser or an electrician. Electricians are required to complete several years of apprenticeship work under the supervision of a licensed electrician while brokers and investment advisers face no such requirement. Most states do not require a high school diploma or a Graduate Equivalency Degree (GED) to become a broker or an investment adviser. No minimum education requirement exists to qualify to sit for the Series 7 or Series 65 exams [regulatory qualifying tests to be eligible to sell securities]…many people who work one-on-one with clients do not attain education beyond this level.”
The investing public has no clue how under-educated many securities salespeople are, according to the study.
One should expect educated advisers but it may not necessarily work. Stock market investing is more about common sense than training per se. . One has actually met the smartest advisers who do not have any such formal education on guiding investments.
One is also surprised to read that electrician requires so much training in US. In India, one just learns the tricks on the job. Infact education could be a hindrance as post-education fixing electrical stuff is seen as a below qualification job. But then we are not very far off from the Us situation. India actually is going through this issue of having huge surplus labour but it is difficult to get electricians, plumbers etc. These were hardly the issues one faced before as these services were not just readily available but really cheap too. We too shall move in lines of west (are moving already) where all small fixes will be done by some company at exorbitant charges as ready fixes are likely to be avoided.