What Are Securities Intermediaries For?

Abstract

The short answer is that they foster the efficiency of the saving-investment market and are therefore very useful, but, as a result of various imperfections, too many of them: (a) sell redundant services and (b) a few are also a source of public danger. The long answer is the one we attempt in the following paragraphs. Our concern is to assess the role intermediaries play in providing services that, while genuinely complementary to their operational tasks, particularly affect medium-sized and small investors. In particular, we review the functions of portfolio management and investment advice, illustrating market imperfections that should concern regulators and consumer advocates alike. Continue reading...