Washington State Department of Financial Institutions

News Release

Friday, February 1, 2008

Mike Stevenson, Director of Securities
PH (360)902-8797 mstevenson@dfi.wa.gov

Lyn Peters, Director of Communications
PH (360) 902-8731 lpeters@dfi.wa.gov


DFI Helps Investors Cut Through The Confusion About Brokerage And Investment Advisory Services

Olympia – The Department of Financial Institutions (DFI) has published an investor bulletin on how investors can improve their chances of selecting brokerage and investment advisory services that meet their needs. The bulletin can be viewed online at http://www.dfi.wa.gov/sd/pdf/investor_bulletin_013108.pdf.  The bulletin also gives investors access to a report from DFI’s broker-dealer examination program on fee-based brokerage accounts offered by some broker-dealers.

The U.S. Securities and Exchange Commission published a study it commissioned from the Rand Corporation on how investment advisers and broker-dealers market their products and services and how well the investors understand the differences among those financial products and services. The Rand Corporation investigators found that even experienced investors did not understand the differences between investment advisers and broker-dealers.

DFI’s investor bulletin gives investors tools to lessen the confusion investors feel, as documented in the Rand report, when faced with a wide array of investment products and services. It gives investors questions to ask themselves about their needs and trading history as well as questions to ask a potential investment adviser or broker-dealer about the services they offer. In particular, it explains how investors can evaluate pricing structures on financial services to determine which pricing structure is most cost-effective for them.

DFI’s broker-dealer examiners have done an extensive review of broker-dealers’ fee-based account programs. The examiners concluded that many Washington investors pay much more in such programs than they would if they had traditional commission-based accounts. The NMFBA report can be viewed online at http://www.dfi.wa.gov/consumers/news/2008/nfmba_report.pdf. Today’s investor bulletin explains how investors can evaluate such programs to avoid paying fees for services they are not likely to use.

About the Division of Securities
www.dfi.wa.gov/sd/ ▪ 360.902.8700
The mission statement of the Securities Division is "To protect the investing public and promote confidence in the capital markets."

This mission is accomplished through a variety of regulatory and enforcement tools, including:

About DFI
www.dfi.wa.gov ▪ 360.902-8700 ▪ 877.746-4334 ▪ In Espaņol 888.976.4422
The Washington State Department of Financial Institutions regulates a variety of financial service providers such as banks, credit unions, mortgage brokers, consumer loan companies, payday lenders, and securities brokers and dealers. The department has won numerous awards for its financial literacy and outreach programs developed to protect consumers from financial fraud. In addition to posting information about licensees and administrative actions, the DFI’s Web site features consumer tips on a variety of financial fraud-related topics.