Tom Bradley is president of the Institutional division of TD Ameritrade, the new company resulting from last year's merger of TD Waterhouse and Ameritrade. Senior Editor Kristen French recently had the opportunity to speak to Bradley about his opinion of the new broker/dealer exemption.

Registered Rep.: TD Ameritrade has vocally opposed the new b/d exemption. Why?

Tom Bradley: Investors are confused because the rule is completely absurd. You have an environment where brokerage firms that provide brokerage service for a fee are able to market it so that it completely sounds like an investment-advisory service, but when you dig into the disclosures, if you get that far, it says our interests may not be the same as yours, and this is a brokerage account, not an advice account. The marketing is overshadowing the disclosures.

RR: What is the solution?

TB: Brokerage firms that are providing advice for a fee should be required to offer it under the Investment Advisory Act licensing umbrella. That's the simplest solution. The other main thing that needs to occur here is investor education. An investor survey conducted by TD Ameritrade and released in early May confirms that investors are confused. And most investors said that after reading the disclosure they would be less likely to use a brokerage firm.

RR: TD Ameritrade says it is committed to educating investors. How will it do this?

TB: We're looking at a two-pronged approach. First, we will arm our investment advisor reps that do business through us with materials to educate the investing public and potential clients. Also we're looking at what kind of impact we can have as a company if we were to run advertisements on the differences between stockbrokers and advisors.

RR: Do you think the SEC will ultimately establish a common regulatory standard for all fee-based advice?

TB: The SEC doesn't have the power to create a new set of rules. They would have to take it to Congress. [Still,] I think there is a possibility it could happen. There is a new chairman in there; they are conducting their own study, just kicking it off now.

RR: How is the integration of TD Waterhouse and Ameritrade going?

TB: It's going very well. Just a couple of weeks ago, we completed the b/d conversion. We rebranded. On the advisory side of the business, we are starting to see some bumps in the number of referrals due to the number of Ameritrade clients coming over.