Brokers and Investment Advisers – Know the Difference


What are the main differences between a
broker and an investment advisor? When we are talking about investment services
there are two main differences. First the types of services they provide, and
second how they are paid for those services. Suppose you’re interested in
investing in securities for example stocks bonds and mutual funds both
brokers and investment advisors can give you advice on whether to buy specific
investments like stock in a company or an index fund and after you buy whether
to sell or continue to hold those securities however there are key
differences in the services they provide when helping you invest a broker makes
recommendations that is they will recommend you buy sell or hold a
specific investment and the broker can then complete the transaction for you
you the brokers customer are responsible for deciding what to do an investment
advisor generally manages your account the advisor can advise you to buy sell
or hold securities and the advisor can agree to make some or all of those
decisions for you the second while brokers and investment
advisors can both design an investment strategy for you the account monitoring
services they offer will differ if having a financial professional monitor
your account is important to you you should make sure your financial
professional provides that service and understand exactly how often your
account will be monitored you should know that many financial professionals
are actually registered as both brokers and investment advisors in some cases a
combination of those services may be a good choice for you depending on your
investment goals preferences and needs we at the SEC want you to be armed with
the information to ask the right questions
and make the choices that are best for you well that means going with an
investment advisor a broker or a combination of the two finally it is
important to note that brokers and investment advisers charge different
fees which are often based on the differences in the services they provide
we discuss how brokers and investment advisors are paid in a separate video it
is important that you understand both the services you are buying and how you
are paying for them keep watching to learn more

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