While the SEC prepares to face off with the Financial Planning Association in court its Broker-Dealer exemption, the regulator is launching a study that will look into the differences between a broker and an investment advisor.

The SEC passed the Broker-Dealer Rule last year, which included a provision that required that brokers give new clients a statement that the broker’s interests may not be the same as the client’s. The FPA took exception to the part of the rule that allows brokers to call themselves financial advisors and to give investment advice without adhering to the fiduciary duties in the Advisers Act.

The Commission’s new study is intended to determine whether or not investors are confused about the different roles and responsibilities of brokers and investment advisers.

“Our goal is to improve investor protection by updating our regulation to deal with the realities of today’s marketplace,” said Chairman Christopher Cox in a released statement. “We will develop the best available information, from inside and outside of the Commission, to inform this important process. Unbiased, high-quality research provided through the contract envisioned in our request for proposals will help us to do so. We welcome bids from all firms and individuals capable of meeting that demanding standard of excellence.”

The SEC is looking at various aspects of the two industries, including the titles used by investment professionals, the fees and costs of financial products, accounts, programs and services to individual investors. The study will also examine the compensation received by broker-dealers, investment advisers and their associated persons from other sources for offering financial products, accounts, programs and services to individual investors.

Proponents from both sides welcomed the study as a good first step in laying down the groundwork toward future regulations.

“There has been very little discussion of the substance of these things. How can you make a decision from a regulatory standpoint?” asked Mike Odoff, general counsel for the SIA.

However, others who have opposed the SEC on this issue are quick to point out some of the problems with the study. Barbara Roper, director of investor protection at the Consumer Federation of America, was happy to see that a study was going forward, but was concerned about who would be making any final decisions based on the findings.

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