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

The difference between a broker-dealer and an investment adviser is a crucial distinction in the realm of investment fraud law in Washington. A broker-dealer is a firm that buys and sells securities on behalf of its clients, and is regulated by the U.S. Securities and Exchange Commission (SEC). Broker-dealers provide advice and recommendations to their clients about making investments, but due to certain restrictions, their advice and recommendations must be “suitable” and must be in the best interest of the clients. On the other hand, an investment adviser is a person or firm that is regulated by state or federal law, and provides advice and recommendations to their clients about making investments. Unlike broker-dealers, investment advisers must always act in their clients’ best interest and provide advice that is suitable to their clients’ needs. Investment advisers must also register with the SEC or the appropriate state securities regulator, and must abide by all relevant laws and regulations. In short, the main distinction between a broker-dealer and an investment adviser is the level of regulation and legal responsibility that each must adhere to. Broker-dealers must include certain restrictions when providing advice, whereas investment advisers must always act in their clients’ best interest. In Washington, all broker-dealers and investment advisers are subject to anti-fraud laws to help protect consumers from investment fraud.

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

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