"Obviously, there's freedom. We're not told which products to sell to our clients," says James Crosson of Fall River, Mass., an advisor affiliated with Investors Capital Corp., the independent broker dealer arm of Investors Capital Holdings Ltd.

Randy Neumann, an independent advisor in Paramus, N.J., who uses LPL Financial Corp. as his firm's broker dealer, says reclassifying advisers wouldn't make sense. "We come and go as we please," says Neumann. "We do things for our clients that we believe is in their best interests."

Tax implications for the companies could be substantial. They could owe federal employment taxes of 7.65% on reclassified advisors, plus state taxes, which vary, according to Robert Willens, a New York tax analyst.

Reclassifying advisors, however, may be appropriate in some cases, says Lynn Turner, a former Securities and Exchange Commission chief accountant. Some broker dealers affiliate with an advisor for the purpose of selling specific products, says Turner, now a managing director at LECG, a global consulting firm. For example, some advisors may work in a building with a broker dealer's name on it, be paid a fee of some type and not work for anyone else, he says. In that instance, "why would you say they're not employees?" he says.

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