What is the difference between a broker-dealer and an investment adviser?

The difference between a broker-dealer and an investment adviser is an important concept to understand in the realm of investment fraud law in California. A broker-dealer is a person or firm who buys and sells securities on behalf of their customers. They are compensated with a commission when their customers purchase or sell securities. Broker-dealers must be registered with the Financial Industry Regulatory Authority (FINRA), and they must ensure that they are following applicable securities laws when conducting their business. An investment adviser, on the other hand, is someone who provides advice on investments and helps clients make decisions related to their investments. Unlike a broker-dealer, investment advisers do not directly execute orders for their clients. Instead, they offer financial advice and counsel. Investment advisers must also be registered with their state and the Securities and Exchange Commission (SEC). They are held to a fiduciary standard, meaning they must act in their client’s best interest and disclose any potential conflicts of interest. In summary, the main difference between a broker-dealer and an investment adviser is the services they provide. Broker-dealers are responsible for executing orders on behalf of their customers, while investment advisers provide financial advice to their clients. Both entities must adhere to applicable laws and regulations, and they must be registered with the relevant state and federal institutions.

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What is the difference between a broker-dealer and an investment adviser?

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