What Is the Difference Between a Broker and Investment Adviser?

By Julie S. Mendel, SILA-A, CDEi
Jun 22, 2021

If you want to enter a career in the securities industry, there are several different career paths. Two popular securities professions include brokers and investment advisers. But if you're new to the industry, you may not know the exact differences between brokers and financial advisers — or which career might be right for you.

In this article, we break down what securities brokers and investment advisers are, the differences between the two, and how you can begin your securities career.

What Is the Difference Between a Broker and Investment Adviser

What is a Securities Broker?

A securities broker (also called Registered Representative and/or financial service, commodities, or securities sales agents) is someone who purchases financial products on behalf of another person in exchange for a commission. Securities brokers advise customers who want to make financial investments. Brokers are licensed by the Financial Industry Regulatory Authority (FINRA).

Brokers sell products for a fee, which are sold by the brokerage firm they are affiliated with. Each investment decision is a distinct transaction for which the broker gets paid. Consultation and advice between the broker and client is common, but essentially it is mostly a transaction-based relationship.

What is an Investment Adviser?

An investment adviser is someone who provides investment advice to clients or issues reports or analyses regarding securities, for compensation. Most states define an investment adviser as a person who is paid to do one or more of the following:

  • Make recommendations or otherwise render advice regarding securities.
  • Manage accounts or portfolios of clients.
  • Determine which securities recommendations or advice they should give.
  • Sell investment advisory services or solicit, offer, or negotiate for the sale of investment advisory services.
  • Supervise employees who perform any other service in this list.

Examples of investment advisers include financial planners, investment consultants, money managers, hedge fund partners, and others who are compensated for providing advice about financial services and securities.

How Do I Become a Broker or Investment Adviser?

If would like to begin a career towards becoming a securities broker or investment adviser, the first step is to take the Securities Industry Essentials® (SIE®) exam. The SIE exam is an introductory-level securities exam which will assess knowledge of basic securities industry information.

If you want to pass the SIE exam on your first attempt, the best way to prepare for the SIE exam is a Securities Industry Essentials® (SIE®) Exam Prep course from an online exam prep provider like WebCE. The WebCE SIE Exam Prep course package includes everything necessary to pass the SIE Exam on the first try. WebCE’s exam prep study course follows the exam content outline and is always kept accurate and up to date.

To help students get the most out of their SIE exam prep study experience, WebCE provides a number of tools and features:

  • Polytonic read-it-to-me audio for all course content
  • Flash Tutor online flashcards, mobile-friendly and perfect for reviewing key terms and concepts on the go
  • State Exam Tutor® exam simulator, which allows students to take full practice exams or build custom exams to test their knowledge on specific topics
  • Study Guide Workbook, designed as a companion for the course material
  • My Study Planner, which empowers future licensees to create a customized learning plan

WebCE’s SIE Exam Prep course package provides a convenient, effective study solution for passing the SIE Exam. To order your SIE Exam Prep course and take one step closer to your career in securities, click the button below or visit our SIE Exam Prep Course Catalog.

SIE® Exam Prep Catalog