Are You Looking for a Broker or an Adviser?

Are You Looking for a Broker or an Adviser?

by Mary Suplee on Oct 30, 2018

According to the Institute for the Fiduciary Standard, the advice you receive from a broker or an adviser may be very different. By law, if you open a brokerage account, a broker will only give you advice on the products they sell. With an investment advisory account, an adviser must give you fiduciary advice, acting in your best interest at all times.

Another point of distinction is who they represent. A broker represents the issuer or underwriter of a financial product, not you the consumer. They are paid by the commissions they earn for selling the issuer’s products to you. This is an inherent conflict of interest and must be disclosed.

An adviser represents only you and you pay a fee for their advice. The relationship is only between the two of you. There is no built in conflict of interest but if they have a conflict, they will tell you so you can decide if you want to do business with them.

To get more information about a particular broker or firm, you can visit brokercheck.finra.org or investor.gov. Ask an advisory firm for a copy of their ADV brochure or visit investor.gov to search for the firm. The ADV brochure is also available on this government site.

Check the background of this investment professional on FINRA's BrokerCheck.