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

The difference between a broker-dealer and an investment adviser lies in the type of investment activity each is licensed to provide. A broker-dealer is responsible for buying and selling investments at the direction of their client. They act as intermediaries between buyers and sellers, facilitating the transactions for a fee or commission. A broker-dealer must have a license from the state or the Financial Industry Regulatory Authority (FINRA) to purchase and sell investments. An investment adviser, on the other hand, is responsible for providing advice to clients about what kinds of investments to make and which ones to avoid. Investment advisers must be registered with either their state securities division or the Securities and Exchange Commission (SEC). They may charge their clients a fee for their services or earn commissions from investment products that they recommend. Broker-dealers and investment advisers are both required to be licensed and must abide by the same laws and regulations when dealing with their clients. In West Virginia, they must also abide by the West Virginia State Investment Fraud Act, which sets out specific rules and regulations for both broker-dealers and investment advisers that are designed to protect investors from fraud.

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

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