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Research Questions

  1. How do the selected countries compare in terms of regulating conflicts of interest in professional financial advice?
  2. What are the observable impacts of recent changes in regulation? In particular, what are the impacts on investor outcomes, such as investment holdings, rates of return, and access to professional financial advice?

Because many people are ill equipped to make complex financial decisions on their own, financial advisers can provide a valuable service in helping investors make such decisions. Given that conflicts of interest may influence advisers' behavior in ways that may be detrimental to their clients' interests, it is informative to examine how countries around the world have used regulation to try to improve the quality of financial advice, and how the regulatory tools used have affected their respective financial advice markets. This review compares the financial advice markets in the United States, the United Kingdom, Australia, Germany, Singapore, and the European Union, for a cross-section of countries that recently made regulatory changes aimed at improving financial advice.

Key Findings

Many countries enacted new regulation to improve financial advice quality.

  • New regulations on financial advisers include commission bans and elevation of required professional standards.
  • Several countries have placed outright bans on some commissions to help align incentives between advisers and their clients, and several raised professional standards required to become a financial adviser.

The results of the new regulations are as yet unclear.

  • There is only limited preliminary evidence about the impact on consumers of the significant financial-regulation changes around the world.

Table of Contents

  • Chapter One

    Introduction

  • Chapter Two

    United States

  • Chapter Three

    United Kingdom

  • Chapter Four

    Australia

  • Chapter Five

    Germany

  • Chapter Six

    Singapore

  • Chapter Seven

    European Union

  • Chapter Eight

    Impacts of Regulatory Changes

  • Chapter Nine

    Summary

This research was undertaken within the Center for Financial and Economic Decision Making (CFED), a part of RAND's Labor and Population research division.

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