This paper discusses the market for financial advisers. Because many people are not financially sophisticated, the quality of financial advice is a retirement policy concern. Financial advisers provide a valuable service, and many provide unbiased advice. The United States Department of Labor has estimated that pension participants save billions of dollars a year in financial mistakes avoided due to financial advice. Financial advisers, however, provide many types of services, sometimes have conflicts of interest, and do not always have a fiduciary duty to provide advice in the best interest of the client. Some financial advisers engage in ’hat switching,’ interacting with the same clients as a fiduciary for some transactions, but without fiduciary responsibility for other transactions. Understanding the adviser’s sources of compensation, including third party compensation, will help identify conflicts of interest that may affect the quality of advice clients receive
