Which Financial Professional is Best for You?

Financial Professional

By Lori Schock, Director of the SEC’s Office of Investor Education and Advocacy

Which financial professional is best for you? Sorry I can’t answer that question directly for you, but please keep reading because I can give you information to consider in helping you make your decision. Whether working with a broker or investment adviser, it’s most important for you to understand the services you get and the fees you pay.

Make Sure You’re Dealing with a Registered Professional
The very first thing you should do before you invest is to check out any financial professional you’re considering working with by going to Investor.gov, and typing the name of the individual or firm in the “Check Out Your Investment Professional” search tool. You can learn about their background, registration status, and more. Registered financial professionals must adhere to certain rules and regulations, so confirming that you are dealing with a registered professional is a great first step toward protecting your money.

Broker or Investment Adviser?
While both a broker and an investment adviser can provide you with an investment strategy, there are some differences between the two−the services they typically provide and the fees you pay. 

A typical broker will carry out your orders to buy, sell and hold investments. They may also recommend or periodically monitor your investments in some accounts. They charge a transaction-based fee (generally called a commission) every time you buy or sell an investment. There may be other account and investment fees as well.

Investment Adviser
Investment advisers typically provide ongoing advice about your investments and monitor how your investments are performing. Investment advisers typically charge an ongoing asset-based fee based on your entire account. They may also charge other transaction and account fees.

Two Hats
Some financial professionals wear two hats and are both brokers and investment advisers. Make sure you know the type of financial professional you’re dealing with, the services you’re getting, and the fees you pay.  For some investors, a combination of brokerage and advisory services may be appropriate.

No Question is Too Small
When deciding which type of financial professional is best for you, keep in mind that you can never ask too many questions. Some basic questions, include:

  • Are you registered with the SEC, a state securities regulator or the Financial Industry Regulatory Authority (FINRA)?
  • What training and experience do you have?
  • Have you ever had any complaints lodged against you or have you been disciplined by the SEC, a state securities regulator, another regulatory organization or a stock exchange?
  • How do you get paid? What fees are involved?
  • How will you be monitoring my account?  
  • How much of my money will go to work for me? 

For more information, go to our Investor Bulletin: Questions to Ask when Hiring an Investment Professional.

Fees Matter
Plain and simple, fees can shrink your investment returns. Certain fees may seem small at first, but they can add up over time.

The transaction-based fees you typically pay brokers vary widely. For example, if you buy $5,000 worth of an investment, you may pay around $50-$100 per transaction.

The ongoing asset-based fees you typically pay advisers are a percentage of the value of your account. For example, if your account is valued at $50,000, you might pay a 1.5 percent asset-based fee or $750 per year. You will often pay a higher percentage when the value of your account is lower.

Make sure you ask about fees upfront. Consider the level of service you want and the fees the financial professional charges for those services. Ask questions about how the fees will affect how much money you will make. For more information on fees, go to our Investor Bulletin: How Fees and Expenses Affect Your Investment Portfolio.

Relationship Summary
Beginning in June 2020, registered brokers and investment advisers will be required to present investors with a relationship summary that will provide information about their services, fees, costs, conflicts and disciplinary information.  Be on the lookout for that.

Whom Should I Pick?
While I can’t tell you whom to pick, I hope you will utilize the information in the relationship summary, along with the free tools and resources on Investor.gov, when looking for a financial professional to help you build a strong financial future. You can make your choice with confidence if you do your homework, ask questions and thoroughly understand the services and fees involved.


The Securities and Exchange Commission disclaims responsibility for any private publication or statement of any SEC employee or Commissioner. This article expresses the author’s views and does not necessarily reflect those of the Commission, the Commissioners, or other members of the staff