Broker-dealers and their lobbyists routinely claim that advice from a broker-dealer is more affordable than advice from an investment adviser, making brokerage services a more attractive option for lowand middle-income customers. There is no doubt that the lack of transparency around broker-dealer costs makes their services appear more affordable, particularly to financially unsophisticated retirement savers. A look beneath the surface quickly reveals, however, that when the total costs of investing are compared, retirement savers who get advice from a broker-dealer will in most cases pay at least as much, and often much more, for a lower level of service.

The following are a few concrete examples to help illustrate this point. We first compare the costs retirement savers pay for the services of brokers and advisers in several common scenarios. Then we look at the relative costs of investment products recommended by broker-dealers and investment advisers. It is only by looking at the total cost of advice and investments that a fair comparison is possible.