What’s the Difference Between a Broker-Dealer and an Investment Adviser?

As more Americans become actively involved in investing to help fund their portfolios for retirement, education or other needs, the question arises: What type of financial professional is best suited to help?

To answer that and to address other key considerations of this important decision, the Securities and Exchange Commission has compiled five helpful videos on its website, which you can access by clicking here.

SEC Chairman Jay Clayton cites these two key questions to ask when choosing the financial professional who is right for you:

  • Is the financial professional registered with the SEC or a state regulator?
  • Is the financial professional a broker or is he/she an investment adviser?

Registration with the SEC or another regulatory agency provides investors with various protections, as these financial professionals are bound by certain rules they must follow. And it’s important to know whether the professional is a broker or an investment adviser in regard to understanding the services you will receive, how you pay them and the obligations the professional has to you.

Clayton says his favorite question he suggests investors ask when considering a potential financial professional you are considering — and which gets straight to the heart of the matter — is this:

“How much of my money is going to fees and costs and how much is going to work for me?”

In the SEC’s series of short videos, Clayton explains the key differences between broker-dealers and investment advisers, the types of services each type of firm offers, how they are paid, and other things to consider in deciding whether to work with a financial professional.

In addition, you can find a variety of other tools on www.investor.gov to help.

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About Syndication Attorneys

We are NOT your stereotypical law firm. We don’t believe in simply taking your money, handing you a stack of technical, often-incomprehensible legal documents and then bidding you good luck and good-bye. At Syndication Attorneys PLLC, we are committed to your success – not just with the project at hand, but your continuing success in business and investing. We are your long-term legal team.

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