Financial Professional Terms: What They Mean and Why You Should Care
Many individual investors are confused by these terms, and do not have a clear understanding of what distinguishes one professional from another.
This article will clarify these terms and discuss differences in the duties owed by financial professionals to their clients.
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In the world of financial advisors, there are two major regulatory environments; practitioners in these environments are brokers and investment advisors.
“Broker” is a legal term. Brokers are in the business of buying and selling securities at their clients’ direction. Another name for a broker is registered representative (or, registered rep). These individuals may work for broker-dealers such as Merrill Lynch, A.G. Edwards, Edward Jones, and UBS, or they may be associated with small local practices such as “Johnny Jones Investments.” If you walk into a commercial bank lobby, the investment professional you meet will likely be a broker. In addition, insurance agents who also offer investments are almost always brokers.
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