Nevertheless, the distinctions are important. Stock Brokers and Registered Representatives of Broker-Dealers, are employed by securities houses to sell investment products. They are paid commissions by the house that can vary greatly from one product to another. These commissions are mostly transaction based, and often directly related to the profitability of the product to the house. These commissions create serious conflicts of interest between the investor and the salesman.
Commissions are only related to profitability to the client by occasional happy coincidence.
Salesmen have a continuing incentive to push high commission products and multiple transactions. Of course, the end result is higher cost and lower returns for the investor. Conflicts of interest are not unique to the investment business. For instance, we don't expect a Chevy salesman to enthusiastically recommend Ford products. Most auto shoppers understand who employs the salesman, and how he is compensated.