What is the difference between an investment adviser and a stockbroker?

The key difference between an investment adviser and a stockbroker is that an investment adviser provides advice on financial matters while a stockbroker sells securities. Investment advisers typically work with individuals or companies to ensure their investments are sound. They provide investment guidance and give recommendations on things like asset allocation, estate planning, tax strategies and retirement savings. Investment advisers are usually registered with the Securities and Exchange Commission (SEC) and must adhere to the Investment Advisers Act of 1940, which protects investors from fraud and other unethical practices. Stockbrokers, on the other hand, are typically regulated by the Financial Industry Regulatory Authority (FINRA). They are responsible for buying and selling stocks and other securities for clients. They are typically compensated through commissions for the transactions they initiate. Unlike investment advisers, stockbrokers do not provide financial advice or guidance; they simply execute a client’s orders to buy or sell certain investments. In the state of Virginia, both investment advisers and stockbrokers must adhere to state investment fraud laws. These laws protect investors from unfair and potentially fraudulent activities that could cause them financial harm. For example, Virginia law states that all investment advisers must register with the Virginia State Corporation Commission and disclose all fees associated with their services. Additionally, stockbrokers must adhere to FINRA regulations, which prohibits them from engaging in deceptive market practices or unapproved investments.

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What is the difference between an investment adviser and a stockbroker?

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