Nebraska Department of Banking and Finance

Broker-Dealer vs. Investment Adviser

What is the difference between a broker-dealer and an investment adviser and which is right for you?

A broker-dealer is a firm or individual licensed to sell individual securities. Typically, a broker-dealer also files a notice of which securities it will sell. An investment adviser cannot sell securities but acts more like a consultant, giving advice on what securities a person should invest in.

In addition, a broker-dealer/agent is typically paid a commission based on each buy or sell transaction for a security. An investment adviser/representative is usually paid a fee for their advisory services or percentage of assets under management.

In many cases, a firm will register as a broker-dealer and an investment adviser, as the two industries typically work together. You may be charged fees for each service provided. In determining which would work best for you, it may be helpful to determine what you would like them to do. Do you wish to purchase securities and do your own research on investments? Or, do you want someone else to do the research and pass along their advice, letting you make your own securities purchases?