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What is the Difference between a Broker and an Investment Advisor?

[vc_row][vc_column][vc_column_text]A Broker acts as an intermediary between an investor and a securities dealer and is compensated through commissions. By law, a broker is prohibited from giving investment advice not incidental to a product they are selling. Recent court rulings have reconfirmed the necessity for a stockbroker to register as an investment advisor if he or she is going to act in the fiduciary capacity of a registered investment advisor. “In March, a U.S. Court of Appeals for the District of Columbia tossed out SEC Rule 202, the so-called Merrill Lynch rule that, for eight years, had allowed registered reps – formerly known as brokers – to offer fee-based brokerage accounts….reps offering the accounts will have to convert them to another compensation arrangement – or register as investment advisors. (And few large broker/dealers deem that a prudent option, since it bestows on their advisors a fiduciary standard with concomitant legal risk.).” This quote is from the May 2007 issue of Registered Rep Magazine.

A Registered Investment Advisor acknowledges and accepts a fiduciary responsibility regulated by the SEC. A Registered Investment Advisory firm is compensated on a fee basis for discretionary active and continuous management of an investor’s assets.

Investors should understand that working with an advisor that is a fiduciary does not guarantee that they will experience greater investment performance or reduced losses as compared to working with an advisor that is not acting as a fiduciary.[/vc_column_text][/vc_column][vc_column][/vc_column][/vc_row][vc_row][vc_column][vc_custom_heading source=”post_title”][/vc_column][/vc_row]

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The views expressed are not necessarily the opinion of Osaic Wealth, Inc., and should not be construed directly or indirectly, as an offer to buy or sell any securities mentioned herein. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance is no guarantee of future results. Please note that individual situations can vary. Therefore, the information presented here should only be relied upon when coordinated with individual professional advice.

Securities offered through  Osaic Wealth, Inc., member FINRA/SIPC. Investment advisory services offered through Norris Financial Group, LLC, a Registered Investment Advisor unaffiliated with Osaic Wealth

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